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114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-734
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SPECIAL NEEDS TRUST FAIRNESS AND MEDICAID IMPROVEMENT ACT
_______
September 9, 2016.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 670]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 670) to amend title XIX of the Social Security
Act to extend the Medicaid rules regarding supplemental needs
trusts for Medicaid beneficiaries to trusts established by
those beneficiaries, and for other purposes, having considered
the same, report favorably thereon with an amendment and
recommend that the bill as amended do pass.
C O N T E N T S
Page
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
Statement of General Performance Goals and Objectives............ 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 5
Duplication of Federal Programs.................................. 5
Disclosure of Directed Rule Makings.............................. 5
Advisory Committee Statement..................................... 5
Applicability to Legislative Branch.............................. 5
Section-by-Section Analysis of the Legislation................... 6
Changes in Existing Law Made by the Bill, as Reported............ 6
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Special Needs Trust
Fairness and Medicaid Improvement Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Fairness in Medicaid supplemental needs trusts.
Sec. 3. Medicaid coverage of tobacco cessation services for mothers of
newborns.
Sec. 4. Eliminating Federal financial participation with respect to
expenditures under Medicaid for agents used for cosmetic purposes or
hair growth.
Sec. 5. Medicaid Improvement Fund.
SEC. 2. FAIRNESS IN MEDICAID SUPPLEMENTAL NEEDS TRUSTS.
(a) In General.--Section 1917(d)(4)(A) of the Social Security Act (42
U.S.C. 1396p(d)(4)(A)) is amended by inserting ``the individual,''
after ``for the benefit of such individual by''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
to trusts established on or after the date of the enactment of this
Act.
SEC. 3. MEDICAID COVERAGE OF TOBACCO CESSATION SERVICES FOR MOTHERS OF
NEWBORNS.
(a) In General.--Section 1905(bb) of the Social Security Act (42
U.S.C. 1396d(bb)) is amended by adding at the end the following new
paragraph:
``(4) A woman shall continue to be treated as described in this
subsection as a pregnant woman through the end of the 1-year period
beginning on the date of the birth of a child of the woman.''.
(b) Conforming Amendments.--
(1) Subsections (a)(2)(B) and (b)(2)(B) of section 1916 of
the Social Security Act (42 U.S.C. 1396o) are each amended by
inserting ``(and women described in section 1905(bb) as
pregnant women pursuant to paragraph (4) of such section)''
after ``tobacco cessation by pregnant women''.
(2) Section 1927(d)(2)(F) of the Social Security Act (42
U.S.C. 1396r-8(d)(2)(F)) is amended by inserting ``(and women
described in section 1905(bb) as pregnant women pursuant to
paragraph (4) of such section)'' after ``pregnant women''.
(c) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall apply with respect to items and
services furnished on or after the date that is two years after
the date of the enactment of this Act.
(2) Exception for state legislation.--In the case of a State
plan under title XIX of the Social Security Act, which the
Secretary of Health and Human Services determines requires
State legislation in order for the plan to meet any requirement
imposed by amendments made by this section, the plan shall not
be regarded as failing to comply with the requirements of such
title solely on the basis of its failure to meet such an
additional requirement before the first day of the first
calendar quarter beginning after the close of the first regular
session of the State legislature that begins after the
effective date specified in paragraph (1). For purposes of the
previous sentence, in the case of a State that has a 2-year
legislative session, each year of the session shall be
considered to be a separate regular session of the State
legislature.
(d) Report.--Not later than two years after the date of the enactment
of this Act, the Inspector General of the Department of Health and
Human Services shall submit to Congress a report that assesses the use
of the tobacco cessation service benefit under the Medicaid program.
Such report shall include an assessment of--
(1) the extent that States are encouraging the use of such
benefit, such as through promotion of beneficiary and provider
awareness of such benefit; and
(2) gaps in the delivery of such benefit.
SEC. 4. ELIMINATING FEDERAL FINANCIAL PARTICIPATION WITH RESPECT TO
EXPENDITURES UNDER MEDICAID FOR AGENTS USED FOR
COSMETIC PURPOSES OR HAIR GROWTH.
(a) In General.--Section 1903(i)(21) of the Social Security Act (42
U.S.C. 1396b(i)(21)) is amended by inserting ``section 1927(d)(2)(C)
(relating to drugs when used for cosmetic purposes or hair growth),
except where medically necessary, and'' after ``drugs described in''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
with respect to calendar quarters beginning on or after the date of the
enactment of this Act.
SEC. 5. MEDICAID IMPROVEMENT FUND.
Section 1941(b) of the Social Security Act (42 U.S.C. 1396w-1(b)) is
amended--
(1) in paragraph (2)--
(A) by striking ``under paragraph (1)'' and inserting
``under this subsection''; and
(B) by redesignating such paragraph as paragraph (3);
and
(2) by inserting after paragraph (1) the following new
paragraph:
``(2) Additional funding.--In addition to any funds otherwise
made available to the Fund, there shall be available to the
Fund, for expenditures from the Fund--
``(A) for fiscal year 2021, $10,000,000, to remain
available until expended; and
``(B) for fiscal year 2022, $14,000,000, to remain
available until expended.''.
Purpose and Summary
H.R. 670, the Special Needs Trust Fairness and Medicaid
Improvement Act, would extend the Medicaid special needs trust
exception to allow non-elderly individuals with disabilities to
establish a special needs trust on their own behalf. If
enacted, special needs trusts established by a non-elderly,
disabled individual would no longer be considered an asset in
determining that individual's eligibility for Medicaid. In
addition, the bill would extend Medicaid coverage of tobacco
cessation services to mothers of newborns for the first year of
the infant's life. To offset the cost of these polices, the
bill would prohibit Federal financial participation under
Medicaid for drugs used for cosmetic purposes or hair growth,
except where medically necessary. The bill would also make
available $10 million in 2021, and an additional $14 million in
2022, in the Medicaid Improvement Fund.
Background and Need for Legislation
Under Federal law, most trusts are counted as an asset in
determining Medicaid eligibility for aged and disabled
individuals and are subject to asset transfer rules. However,
certain types of trusts are exempt and not counted as an asset
for Medicaid eligibility determination. Specifically, Medicaid
does not count certain special-needs trusts and pooled trusts
as assets. Asset transfer rules do not apply to these trust
types. This exception is commonly referred to as the ``special
needs trust exception.''
In order for a trust to qualify under the special needs
trust exception, a trust must contain the assets of an
individual under age 65 (i.e., non-elderly individual) who
meets the statutory definition of disability. Such trusts must
be used to provide funding for certain expenditures that
supplement Medicaid benefits, subject to certain limitations.
Special needs trusts allow non-elderly individuals with
disabilities to maintain their eligibility for Medicaid. When
the beneficiary dies, the State receives the remaining proceeds
of the trust equal to any amounts paid for medical assistance
provided under the State Medicaid program. Under current law,
only parents, grandparents, legal guardians, or a court can
establish a special needs trust on behalf of a non-elderly
disabled individual. H.R. 670 would allow non-elderly
individuals with disabilities to set up special needs trust for
themselves without requiring them to get a court order.
The Centers for Medicare and Medicaid Services (CMS) has
said that ``cigarette smoking is one of the greatest drivers of
adverse health outcomes and costs for state Medicaid
programs.'' By investing in comprehensive tobacco cessation
programs, CMS notes that States have reduced smoking rates and
health care costs and have improved health outcomes. CMS's
review of available literature has led the agency to conclude
that ``tobacco treatment is one of the most cost-effective
preventive services with as much as a $2-$3 return on every
dollar invested.''
Under current law, State Medicaid programs are required to
cover tobacco cessation services for pregnant women. H.R. 670
would extend tobacco cessation benefits to the mothers of
newborns, helping more women make healthy choices to improve
their health and the health of their child. The bill would also
require the Department of Health and Human Service's Office of
Inspector General to report on the use of tobacco cessation
services under Medicaid.
Finally, to offset the costs of these policies, H.R. 670
would prohibit Federal financial participation for drugs used
for cosmetic purposes or hair growth, except where medically
necessary, with savings placed in the Medicaid Improvement
Fund.
Hearings
The Subcommittee on Health held a hearing on H.R. 670 on
September 18, 2015. The Subcommittee received testimony from:
Michael Boyle, M.D., Vice President of
Therapeutics Development, The Cystic Fibrosis
Foundation;
Tim Clontz, Senior Vice President for Health
Services, Cone Health; and
Rick Courtney, President, Special Needs
Alliance.
Committee Consideration
On July 12, 13, and 14, 2016, the full Committee on Energy
and Commerce met in open markup session and ordered H.R. 670,
as amended, favorably reported to the House by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 670 reported.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a hearing and made
findings that are reflected in this report.
Statement of General Performance Goals and Objectives
The objective of H.R. 670 is to allow non-elderly
individuals with disabilities to create a special needs trust
on their own behalf and to provide for tobacco cessation
benefits for mothers of newborns during the first year of the
baby's life.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
670 would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
Earmark, Limited Tax Benefits, and Limited Tariff Benefits
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI
of the Rules of the House of Representatives, the Committee
finds that H.R. 670 contains no earmarks, limited tax benefits,
or limited tariff benefits.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974. At the
time this report was filed, the estimate was not available.
Congressional Budget Office Estimate
At the time this report was filed, the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of 1974
was not available.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Duplication of Federal Programs
No provision of H.R. 670 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting H.R. 670 specifically
directs to be completed no rule making within the meaning of 5
U.S.C. 551.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title; table of contents
This section provides the short title of the ``Special
Needs Trust Fairness and Medicaid Improvement Act'' and a table
of contents.
Section 2. Fairness in medicaid supplemental needs trusts
This section would, effective upon enactment, extend the
special needs trust exception for non-elderly individuals with
disabilities to trusts established by such individuals on their
own behalf.
Section 3. Medicaid coverage of tobacco cessation services for mothers
of newborns
This section would, effective two years after enactment,
require States to provide Medicaid coverage of tobacco
cessation services to beneficiaries who are mothers of newborns
for the first year of the infant's life. The section would also
require the Inspector General of the Department of Health and
Human Services to issue a report, not later than two years
after enactment, that assesses the use of the existing tobacco
cessation benefit for pregnant women under Medicaid.
Section 4. Eliminating federal matching for medicaid expenditures on
drugs used for cosmetic purposes or hair growth
This section would prohibit Federal financial participation
for drugs used for cosmetic purposes or hair growth, except
where medically necessary. This policy takes effect for
calendar quarters beginning on or after the date of enactment.
Section 5. Medicaid improvement fund
This section would make available, until expended, $10
million in 2021, and an additional $14 million in 2022, in the
Medicaid Improvement Fund.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS
* * * * * * *
PAYMENT TO STATES
Sec. 1903. (a) From the sums appropriated therefor, the
Secretary (except as otherwise provided in this section) shall
pay to each State which has a plan approved under this title,
for each quarter, beginning with the quarter commencing January
1, 1966--
(1) an amount equal to the Federal medical assistance
percentage (as defined in section 1905(b), subject to
subsections (g) and (j) of this section and subsection
1923(f)) of the total amount expended during such
quarter as medical assistance under the State plan;
plus
(2)(A) an amount equal to 75 per centum of so much of
the sums expended during such quarter (as found
necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to compensation or training of skilled professional
medical personnel, and staff directly supporting such
personnel, of the State agency or any other public
agency; plus
(B) notwithstanding paragraph (1) or subparagraph
(A), with respect to amounts expended for nursing aide
training and competency evaluation programs, and
competency evaluation programs, described in section
1919(e)(1) (including the costs for nurse aides to
complete such competency evaluation programs),
regardless of whether the programs are provided in or
outside nursing facilities or of the skill of the
personnel involved in such programs, an amount equal to
50 percent (or, for calendar quarters beginning on or
after July 1, 1988, and before October 1, 1990, the
lesser of 90 percent or the Federal medical assistance
percentage plus 25 percentage points) of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to such programs; plus
(C) an amount equal to 75 percent of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to preadmission screening and resident review
activities conducted by the State under section
1919(e)(7); plus
(D) for each calendar quarter during--
(i) fiscal year 1991, an amount equal to 90
percent,
(ii) fiscal year 1992, an amount equal to 85
percent,
(iii) fiscal year 1993, an amount equal to 80
percent, and
(iv) fiscal year 1994 and thereafter, an
amount equal to 75 percent,
of so much of the sums expended during such quarter (as
found necessary by the Secretary for the proper and
efficient administration of the State plan) as are
attributable to State activities under section 1919(g);
plus
(E) an amount equal to 75 percent of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to translation or interpretation services in connection
with the enrollment of, retention of, and use of
services under this title by, children of families for
whom English is not the primary language; plus
(3) an amount equal to--
(A)(i) 90 per centum of so much of the sums
expended during such quarter as are
attributable to the design, development, or
installation of such mechanized claims
processing and information retrieval systems as
the Secretary determines are likely to provide
more efficient, economical, and effective
administration of the plan and to be compatible
with the claims processing and information
retrieval systems utilized in the
administration of title XVIII, including the
State's share of the cost of installing such a
system to be used jointly in the administration
of such State's plan and the plan of any other
State approved under this title,
(ii) 90 per centum of so much of the sums
expended during any such quarter in the fiscal
year ending June 30, 1972, or the fiscal year
ending June 30, 1973, as are attributable to
the design, development, or installation of
cost determination systems for State-owned
general hospitals (except that the total amount
paid to all States under this clause for either
such fiscal year shall not exceed $150,000),
and
(iii) an amount equal to the Federal medical
assistance percentage (as defined in section
1905(b)) of so much of the sums expended during
such quarter (as found necessary by the
Secretary for the proper and efficient
administration of the State plan) as are
attributable to such developments or
modifications of systems of the type described
in clause (i) as are necessary for the
efficient collection and reporting on child
health measures; and
(B) 75 per centum of so much of the sums
expended during such quarter as are
attributable to the operation of systems
(whether such systems are operated directly by
the State or by another person under a contract
with the State) of the type described in
subparagraph (A)(i) (whether or not designed,
developed, or installed with assistance under
such subparagraph) which are approved by the
Secretary and which include provision for
prompt written notice to each individual who is
furnished services covered by the plan, or to
each individual in a sample group of
individuals who are furnished such services, of
the specific services (other than confidential
services) so covered, the name of the person or
persons furnishing the services, the date or
dates on which the services were furnished, and
the amount of the payment or payments made
under the plan on account of the services; and
(C)(i) 75 per centum of the sums expended
with respect to costs incurred during such
quarter (as found necessary by the Secretary
for the proper and efficient administration of
the State plan) as are attributable to the
performance of medical and utilization review
by a utilization and quality control peer
review organization or by an entity which meets
the requirements of section 1152, as determined
by the Secretary, under a contract entered into
under section 1902(d); and
(ii) 75 percent of the sums expended with
respect to costs incurred during such quarter
(as found necessary by the Secretary for the
proper and efficient administration of the
State plan) as are attributable to the
performance of independent external reviews
conducted under section 1932(c)(2); and
(D) 75 percent of so much of the sums
expended by the State plan during a quarter in
1991, 1992, or 1993, as the Secretary
determines is attributable to the statewide
adoption of a drug use review program which
conforms to the requirements of section
1927(g);
(E) 50 percent of the sums expended with
respect to costs incurred during such quarter
as are attributable to providing--
(i) services to identify and educate
individuals who are likely to be
eligible for medical assistance under
this title and who have Sickle Cell
Disease or who are carriers of the
sickle cell gene, including education
regarding how to identify such
individuals; or
(ii) education regarding the risks of
stroke and other complications, as well
as the prevention of stroke and other
complications, in individuals who are
likely to be eligible for medical
assistance under this title and who
have Sickle Cell Disease; and
(F)(i) 100 percent of so much of the sums
expended during such quarter as are
attributable to payments to Medicaid providers
described in subsection (t)(1) to encourage the
adoption and use of certified EHR technology;
and
(ii) 90 percent of so much of the sums
expended during such quarter as are
attributable to payments for reasonable
administrative expenses related to the
administration of payments described in clause
(i) if the State meets the condition described
in subsection (t)(9); plus
(H)(i) 90 percent of the sums expended during
the quarter as are attributable to the design,
development, or installation of such mechanized
verification and information retrieval systems
as the Secretary determines are necessary to
implement section 1902(ee) (including a system
described in paragraph (2)(B) thereof), and
(ii) 75 percent of the sums expended during
the quarter as are attributable to the
operation of systems to which clause (i)
applies, plus
(4) an amount equal to 100 percent of the sums
expended during the quarter which are attributable to
the costs of the implementation and operation of the
immigration status verification system described in
section 1137(d); plus
(5) an amount equal to 90 per centum of the sums
expended during such quarter which are attributable to
the offering, arranging, and furnishing (directly or on
a contract basis) of family planning services and
supplies;
(6) subject to subsection (b)(3), an amount equal
to--
(A) 90 per centum of the sums expended during
such a quarter within the twelve-quarter period
beginning with the first quarter in which a
payment is made to the State pursuant to this
paragraph, and
(B) 75 per centum of the sums expended during
each succeeding calendar quarter,
with respect to costs incurred during such quarter (as
found necessary by the Secretary for the elimination of
fraud in the provision and administration of medical
assistance provided under the State plan) which are
attributable to the establishment and operation of
(including the training of personnel employed by) a
State medicaid fraud control unit (described in
subsection (q)); plus
(7) subject to section 1919(g)(3)(B), an amount equal
to 50 per centum of the remainder of the amounts
expended during such quarter as found necessary by the
Secretary for the proper and efficient administration
of the State plan.
(b)(1) Notwithstanding the preceding provisions of this
section, the amount determined under subsection (a)(1) for any
State for any quarter beginning after December 31, 1969, shall
not take into account any amounts expended as medical
assistance with respect to individuals aged 65 or over and
disabled individuals entitled to hospital insurance benefits
under title XVIII which would not have been so expended if the
individuals involved had been enrolled in the insurance program
established by part B of title XVIII, other than amounts
expended under provisions of the plan of such State required by
section 1902(a)(34).
(2) For limitation on Federal participation for capital
expenditures which are out of conformity with a comprehensive
plan of a State or areawide planning agency, see section 1122.
(3) The amount of funds which the Secretary is otherwise
obligated to pay a State during a quarter under subsection
(a)(6) may not exceed the higher of--
(A) $125,000, or
(B) one-quarter of 1 per centum of the sums expended
by the Federal, State, and local governments during the
previous quarter in carrying out the State's plan under
this title.
(4) Amounts expended by a State for the use of an enrollment
broker in marketing medicaid managed care organizations and
other managed care entities to eligible individuals under this
title shall be considered, for purposes of subsection (a)(7),
to be necessary for the proper and efficient administration of
the State plan but only if the following conditions are met
with respect to the broker:
(A) The broker is independent of any such entity and
of any health care providers (whether or not any such
provider participates in the State plan under this
title) that provide coverage of services in the same
State in which the broker is conducting enrollment
activities.
(B) No person who is an owner, employee, consultant,
or has a contract with the broker either has any direct
or indirect financial interest with such an entity or
health care provider or has been excluded from
participation in the program under this title or title
XVIII or debarred by any Federal agency, or subject to
a civil money penalty under this Act.
(5) Notwithstanding the preceding provisions of this section,
the amount determined under subsection (a)(1) for any State
shall be decreased in a quarter by the amount of any health
care related taxes (described in section 1902(w)(3)(A)) that
are imposed on a hospital described in subsection (w)(3)(F) in
that quarter.
(c) Nothing in this title shall be construed as prohibiting
or restricting, or authorizing the Secretary to prohibit or
restrict, payment under subsection (a) for medical assistance
for covered services furnished to a child with a disability
because such services are included in the child's
individualized education program established pursuant to part B
of the Individuals with Disabilities Education Act or furnished
to an infant or toddler with a disability because such services
are included in the child's individualized family service plan
adopted pursuant to part C of such Act.
(d)(1) Prior to the beginning of each quarter, the Secretary
shall estimate the amount to which a State will be entitled
under subsections (a) and (b) for such quarter, such estimates
to be based on (A) a report filed by the State containing its
estimate of the total sum to be expended in such quarter in
accordance with the provisions of such subsections, and stating
the amount appropriated or made available by the State and its
political subdivisions for such expenditures in such quarter,
and if such amount is less than the State's proportionate share
of the total sum of such estimated expenditures, the source or
sources from which the difference is expected to be derived,
and (B) such other investigation as the Secretary may find
necessary.
(2)(A) The Secretary shall then pay to the State, in such
installments as he may determine, the amount so estimated,
reduced or increased to the extent of any overpayment or
underpayment which the Secretary determines was made under this
section to such State for any prior quarter and with respect to
which adjustment has not already been made under this
subsection.
(B) Expenditures for which payments were made to the State
under subsection (a) shall be treated as an overpayment to the
extent that the State or local agency administering such plan
has been reimbursed for such expenditures by a third party
pursuant to the provisions of its plan in compliance with
section 1902(a)(25).
(C) For purposes of this subsection, when an overpayment is
discovered, which was made by a State to a person or other
entity, the State shall have a period of 1 year in which to
recover or attempt to recover such overpayment before
adjustment is made in the Federal payment to such State on
account of such overpayment. Except as otherwise provided in
subparagraph (D), the adjustment in the Federal payment shall
be made at the end of the 1-year period, whether or not
recovery was made.
(D)(i) In any case where the State is unable to recover a
debt which represents an overpayment (or any portion thereof)
made to a person or other entity on account of such debt having
been discharged in bankruptcy or otherwise being uncollectable,
no adjustment shall be made in the Federal payment to such
State on account of such overpayment (or portion thereof).
(ii) In any case where the State is unable to recover a debt
which represents an overpayment (or any portion thereof) made
to a person or other entity due to fraud within 1 year of
discovery because there is not a final determination of the
amount of the overpayment under an administrative or judicial
process (as applicable), including as a result of a judgment
being under appeal, no adjustment shall be made in the Federal
payment to such State on account of such overpayment (or
portion thereof) before the date that is 30 days after the date
on which a final judgment (including, if applicable, a final
determination on an appeal) is made.
(3)(A) The pro rata share to which the United States is
equitably entitled, as determined by the Secretary, of the net
amount recovered during any quarter by the State or any
political subdivision thereof with respect to medical
assistance furnished under the State plan shall be considered
an overpayment to be adjusted under this subsection.
(B)(i) Subparagraph (A) and paragraph (2)(B) shall not apply
to any amount recovered or paid to a State as part of the
comprehensive settlement of November 1998 between manufacturers
of tobacco products, as defined in section 5702(d) of the
Internal Revenue Code of 1986, and State Attorneys General, or
as part of any individual State settlement or judgment reached
in litigation initiated or pursued by a State against one or
more such manufacturers.
(ii) Except as provided in subsection (i)(19), a State may
use amounts recovered or paid to the State as part of a
comprehensive or individual settlement, or a judgment,
described in clause (i) for any expenditures determined
appropriate by the State.
(4) Upon the making of any estimate by the Secretary under
this subsection, any appropriations available for payments
under this section shall be deemed obligated.
(5) In any case in which the Secretary estimates that there
has been an overpayment under this section to a State on the
basis of a claim by such State that has been disallowed by the
Secretary under section 1116(d), and such State disputes such
disallowance, the amount of the Federal payment in controversy
shall, at the option of the State, be retained by such State or
recovered by the Secretary pending a final determination with
respect to such payment amount. If such final determination is
to the effect that any amount was properly disallowed, and the
State chose to retain payment of the amount in controversy, the
Secretary shall offset, from any subsequent payments made to
such State under this title, an amount equal to the proper
amount of the disallowance plus interest on such amount
disallowed for the period beginning on the date such amount was
disallowed and ending on the date of such final determination
at a rate (determined by the Secretary) based on the average of
the bond equivalent of the weekly 90-day treasury bill auction
rates during such period.
(6)(A) Each State (as defined in subsection (w)(7)(D)) shall
include, in the first report submitted under paragraph (1)
after the end of each fiscal year, information related to--
(i) provider-related donations made to the State or
units of local government during such fiscal year, and
(ii) health care related taxes collected by the State
or such units during such fiscal year.
(B) Each State shall include, in the first report submitted
under paragraph (1) after the end of each fiscal year,
information related to the total amount of payment adjustments
made, and the amount of payment adjustments made to individual
providers (by provider), under section 1923(c) during such
fiscal year.
(e) A State plan approved under this title may include, as a
cost with respect to hospital services under the plan under
this title, periodic expenditures made to reflect transitional
allowances established with respect to a hospital closure or
conversion under section 1884.
(f)(1)(A) Except as provided in paragraph (4), payment under
the preceding provisions of this section shall not be made with
respect to any amount expended as medical assistance in a
calendar quarter, in any State, for any member of a family the
annual income of which exceeds the applicable income limitation
determined under this paragraph.
(B)(i) Except as provided in clause (ii) of this
subparagraph, the applicable income limitation with respect to
any family is the amount determined, in accordance with
standards prescribed by the Secretary, to be equivalent to
133\1/3\ percent of the highest amount which would ordinarily
be paid to a family of the same size without any income or
resources, in the form of money payments, under the plan of the
State approved under part A of title IV of this Act.
(ii) If the Secretary finds that the operation of a uniform
maximum limits payments to families of more than one size, he
may adjust the amount otherwise determined under clause (i) to
take account of families of different sizes.
(C) The total amount of any applicable income limitation
determined under subparagraph (B) shall, if it is not a
multiple of $100 or such other amount as the Secretary may
prescribe, be rounded to the next higher multiple of $100 or
such other amount, as the case may be.
(2)(A) In computing a family's income for purposes of
paragraph (1), there shall be excluded any costs (whether in
the form of insurance premiums or otherwise and regardless of
whether such costs are reimbursed under another public program
of the State or political subdivision thereof) incurred by such
family for medical care or for any other type of remedial care
recognized under State law or, (B) notwithstanding section 1916
at State option, an amount paid by such family, at the family's
option, to the State, provided that the amount, when combined
with costs incurred in prior months, is sufficient when
excluded from the family's income to reduce such family's
income below the applicable income limitation described in
paragraph (1). The amount of State expenditures for which
medical assistance is available under subsection (a)(1) will be
reduced by amounts paid to the State pursuant to this
subparagraph.
(3) For purposes of paragraph (1)(B), in the case of a family
consisting of only one individual, the ``highest amount which
would ordinarily be paid'' to such family under the State's
plan approved under part A of title IV of this Act shall be the
amount determined by the State agency (on the basis of
reasonable relationship to the amounts payable under such plan
to families consisting of two or more persons) to be the amount
of the aid which would ordinarily be payable under such plan to
a family (without any income or resources) consisting of one
person if such plan provided for aid to such a family.
(4) The limitations on payment imposed by the preceding
provisions of this subsection shall not apply with respect to
any amount expended by a State as medical assistance for any
individual described in section 1902(a)(10)(A)(i)(III),
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V),
1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII),
1902(a)(10)(A)(i)(VIII),1902(a)(10)(A)(i)(IX),
1902(a)(10)(A)(ii)(IX), 1902(a)(10)(A)(ii)(X),
1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), or
1902(a)(10)(A)(ii)(XV), 1902(a)(10)(A)(ii)(XVI),
1902(a)(10)(A)(ii)(XVII), 1902(a)(10)(A)(ii)(XVIII),
1902(a)(10)(A)(ii)(XIX), 1902(a)(10)(A)(ii)(XX),
1902(a)(10)(A)(ii)(XXI), 1902(a)(10)(A)(ii)(XXII), 1905(p)(1)
or for any individual--
(A) who is receiving aid or assistance under any plan
of the State approved under title I, X, XIV or XVI, or
part A of title IV, or with respect to whom
supplemental security income benefits are being paid
under title XVI, or
(B) who is not receiving such aid or assistance, and
with respect to whom such benefits are not being paid,
but (i) is eligible to receive such aid or assistance,
or to have such benefits paid with respect to him, or
(ii) would be eligible to receive such aid or
assistance, or to have such benefits paid with respect
to him if he were not in a medical institution, or
(C) with respect to whom there is being paid, or who
is eligible, or would be eligible if he were not in a
medical institution, to have paid with respect to him,
a State supplementary payment and is eligible for
medical assistance equal in amount, duration, and scope
to the medical assistance made available to individuals
described in section 1902(a)(10)(A), or who is a PACE
program eligible individual enrolled in a PACE program
under section 1934, but only if the income of such
individual (as determined under section 1612, but
without regard to subsection (b) thereof) does not
exceed 300 percent of the supplemental security income
benefit rate established by section 1611(b)(1),
at the time of the provision of the medical assistance giving
rise to such expenditure.
(g)(1) Subject to paragraph (3), with respect to amounts paid
for the following services furnished under the State plan after
June 30, 1973 (other than services furnished pursuant to a
contract with a health maintenance organization as defined in
section 1876 or which is a qualified health maintenance
organization (as defined in section 1310(d) of the Public
Health Service Act)), the Federal medical assistance percentage
shall be decreased as follows: After an individual has received
inpatient hospital services or services in an intermediate care
facility for the mentally retarded for 60 days or inpatient
mental hospital services for 90 days (whether or not such days
are consecutive), during any fiscal year, the Federal medical
assistance percentage with respect to amounts paid for any such
care furnished thereafter to such individual shall be decreased
by a per centum thereof (determined under paragraph (5)) unless
the State agency responsible for the administration of the plan
makes a showing satisfactory to the Secretary that, with
respect to each calendar quarter for which the State submits a
request for payment at the full Federal medical assistance
percentage for amounts paid for inpatient hospital services or
services in an intermediate care facility for the mentally
retarded furnished beyond 60 days (or inpatient mental hospital
services furnished beyond 90 days), such State has an effective
program of medical review of the care of patients in mental
hospitals and intermediate care facilities for the mentally
retarded pursuant to paragraphs (26) and (31) of section
1902(a) whereby the professional management of each case is
reviewed and evaluated at least annually by independent
professional review teams. In determining the number of days on
which an individual has received services described in this
subsection, there shall not be counted any days with respect to
which such individual is entitled to have payments made (in
whole or in part) on his behalf under section 1812.
(2) The Secretary shall, as part of his validation procedures
under this subsection, conduct timely sample onsite surveys of
private and public institutions in which recipients of medical
assistance may receive care and services under a State plan
approved under this title, and his findings with respect to
such surveys (as well as the showings of the State agency
required under this subsection) shall be made available for
public inspection.
(3)(A) No reduction in the Federal medical assistance
percentage of a State otherwise required to be imposed under
this subsection shall take effect--
(i) if such reduction is due to the State's
unsatisfactory or invalid showing made with respect to
a calendar quarter beginning before January 1, 1977;
(ii) before January 1, 1978;
(iii) unless a notice of such reduction has been
provided to the State at least 30 days before the date
such reduction takes effect; or
(iv) due to the State's unsatisfactory or invalid
showing made with respect to a calendar quarter
beginning after September 30, 1977, unless notice of
such reduction has been provided to the State no later
than the first day of the fourth calendar quarter
following the calendar quarter with respect to which
such showing was made.
(B) The Secretary shall waive application of any reduction in
the Federal medical assistance percentage of a State otherwise
required to be imposed under paragraph (1) because a showing by
the State, made under such paragraph with respect to a calendar
quarter ending after January 1, 1977, and before January 1,
1978, is determined to be either unsatisfactory under such
paragraph or invalid under paragraph (2), if the Secretary
determines that the State's showing made under paragraph (1)
with respect to any calendar quarter ending on or before
December 31, 1978, is satisfactory under such paragraph and is
valid under paragraph (2).
(4)(A) The Secretary may not find the showing of a State,
with respect to a calendar quarter under paragraph (1), to be
satisfactory if the showing is submitted to the Secretary later
than the 30th day after the last day of the calendar quarter,
unless the State demonstrates to the satisfaction of the
Secretary good cause for not meeting such deadline.
(B) The Secretary shall find a showing of a State, with
respect to a calendar quarter under paragraph (1), to be
satisfactory under such paragraph with respect to the
requirement that the State conduct annual onsite inspections in
mental hospitals and intermediate care facilities for the
mentally retarded under paragraphs (26) and (31) of section
1902(a), if the showing demonstrates that the State has
conducted such an onsite inspection during the 12-month period
ending on the last date of the calendar quarter--
(i) in each of not less than 98 per centum of the
number of such hospitals and facilities requiring such
inspection, and
(ii) in every such hospital or facility which has 200
or more beds,
and that, with respect to such hospitals and facilities not
inspected within such period, the State has exercised good
faith and due diligence in attempting to conduct such
inspection, or if the State demonstrates to the satisfaction of
the Secretary that it would have made such a showing but for
failings of a technical nature only.
(5) In the case of a State's unsatisfactory or invalid
showing made with respect to a type of facility or
institutional services in a calendar quarter, the per centum
amount of the reduction of the State's Federal medical
assistance percentage for that type of services under paragraph
(1) is equal to 33\1/3\ per centum multiplied by a fraction,
the denominator of which is equal to the total number of
patients receiving that type of services in that quarter under
the State plan in facilities or institutions for which a
showing was required to be made under this subsection, and the
numerator of which is equal to the number of such patients
receiving such type of services in that quarter in those
facilities or institutions for which a satisfactory and valid
showing was not made for that calendar quarter.
(6)(A) Recertifications required under section 1902(a)(44)
shall be conducted at least every 60 days in the case of
inpatient hospital services.
(B) Such recertifications in the case of services in an
intermediate care facility for the mentally retarded shall be
conducted at least--
(i) 60 days after the date of the initial
certification,
(ii) 180 days after the date of the initial
certification,
(iii) 12 months after the date of the initial
certification,
(iv) 18 months after the date of the initial
certification,
(v) 24 months after the date of the initial
certification, and
(vi) every 12 months thereafter.
(C) For purposes of determining compliance with the schedule
established by this paragraph, a recertification shall be
considered to have been done on a timely basis if it was
performed not later than 10 days after the date the
recertification was otherwise required and the State
establishes good cause why the physician or other person making
such recertification did not meet such schedule.
(i) Payment under the preceding provisions of this section
shall not be made--
(1) for organ transplant procedures unless the State
plan provides for written standards respecting the
coverage of such procedures and unless such standards
provide that--
(A) similarly situated individuals are
treated alike; and
(B) any restriction, on the facilities or
practitioners which may provide such
procedures, is consistent with the
accessibility of high quality care to
individuals eligible for the procedures under
the State plan; or
(2) with respect to any amount expended for an item
or service (other than an emergency item or service,
not including items or services furnished in an
emergency room of a hospital) furnished--
(A) under the plan by any individual or
entity during any period when the individual or
entity is excluded from participation under
title V, XVIII, or XX or under this title
pursuant to section 1128, 1128A, 1156, or
1842(j)(2),
(B) at the medical direction or on the
prescription of a physician, during the period
when such physician is excluded from
participation under title V, XVIII, or XX or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2) and when the person
furnishing such item or service knew or had
reason to know of the exclusion (after a
reasonable time period after reasonable notice
has been furnished to the person); or
(C) by any individual or entity to whom the
State has failed to suspend payments under the
plan during any period when there is pending an
investigation of a credible allegation of fraud
against the individual or entity, as determined
by the State in accordance with regulations
promulgated by the Secretary for purposes of
section 1862(o) and this subparagraph, unless
the State determines in accordance with such
regulations there is good cause not to suspend
such payments; or
(3) with respect to any amount expended for inpatient
hospital services furnished under the plan (other than
amounts attributable to the special situation of a
hospital which serves a disproportionate number of low
income patients with special needs) to the extent that
such amount exceeds the hospital's customary charges
with respect to such services or (if such services are
furnished under the plan by a public institution free
of charge or at nominal charges to the public) exceeds
an amount determined on the basis of those items
(specified in regulations prescribed by the Secretary)
included in the determination of such payment which the
Secretary finds will provide fair compensation to such
institution for such services; or
(4) with respect to any amount expended for care or
services furnished under the plan by a hospital unless
such hospital has in effect a utilization review plan
which meets the requirements imposed by section 1861(k)
for purposes of title XVIII; and if such hospital has
in effect such a utilization review plan for purposes
of title XVIII, such plan shall serve as the plan
required by this subsection (with the same standards
and procedures and the same review committee or group)
as a condition of payment under this title; the
Secretary is authorized to waive the requirements of
this paragraph if the State agency demonstrates to his
satisfaction that it has in operation utilization
review procedures which are superior in their
effectiveness to the procedures required under section
1861(k); or
(5) with respect to any amount expended for any drug
product for which payment may not be made under part B
of title XVIII because of section 1862(c); or
(6) with respect to any amount expended for inpatient
hospital tests (other than in emergency situations) not
specifically ordered by the attending physician or
other responsible practitioner; or
(7) with respect to any amount expended for clinical
diagnostic laboratory tests performed by a physician,
independent laboratory, or hospital, to the extent such
amount exceeds the amount that would be recognized
under section 1833(h) for such tests performed for an
individual enrolled under part B of title XVIII; or
(8) with respect to any amount expended for medical
assistance (A) for nursing facility services to
reimburse (or otherwise compensate) a nursing facility
for payment of a civil money penalty imposed under
section 1919(h) or (B) for home and community care to
reimburse (or otherwise compensate) a provider of such
care for payment of a civil money penalty imposed under
this title or title XI or for legal expenses in defense
of an exclusion or civil money penalty under this title
or title XI if there is no reasonable legal ground for
the provider's case; or
(10)(A) with respect to covered outpatient drugs
unless there is a rebate agreement in effect under
section 1927 with respect to such drugs or unless
section 1927(a)(3) applies,
(B) with respect to any amount expended for an
innovator multiple source drug (as defined in section
1927(k)) dispensed on or after July 1, 1991, if, under
applicable State law, a less expensive multiple source
drug could have been dispensed, but only to the extent
that such amount exceeds the upper payment limit for
such multiple source drug;
(C) with respect to covered outpatient drugs
described in section 1927(a)(7), unless
information respecting utilization data and
coding on such drugs that is required to be
submitted under such section is submitted in
accordance with such section, and
(D) with respect to any amount expended for
reimbursement to a pharmacy under this title for the
ingredient cost of a covered outpatient drug for which
the pharmacy has already received payment under this
title (other than with respect to a reasonable
restocking fee for such drug); or
(11) with respect to any amount expended for
physicians' services furnished on or after the first
day of the first quarter beginning more than 60 days
after the date of establishment of the physician
identifier system under section 1902(x), unless the
claim for the services includes the unique physician
identifier provided under such system; or
(13) with respect to any amount expended to reimburse
(or otherwise compensate) a nursing facility for
payment of legal expenses associated with any action
initiated by the facility that is dismissed on the
basis that no reasonable legal ground existed for the
institution of such action; or
(14) with respect to any amount expended on
administrative costs to carry out the program under
section 1928; or
(15) with respect to any amount expended for a
single-antigen vaccine and its administration in any
case in which the administration of a combined-antigen
vaccine was medically appropriate (as determined by the
Secretary); or
(16) with respect to any amount expended for which
funds may not be used under the Assisted Suicide
Funding Restriction Act of 1997; or
(17) with respect to any amount expended for roads,
bridges, stadiums, or any other item or service not
covered under a State plan under this title; or
(18) with respect to any amount expended for home
health care services provided by an agency or
organization unless the agency or organization provides
the State agency on a continuing basis a surety bond in
a form specified by the Secretary under paragraph (7)
of section 1861(o) and in an amount that is not less
than $50,000 or such comparable surety bond as the
Secretary may permit under the last sentence of such
section; or
(19) with respect to any amount expended on
administrative costs to initiate or pursue litigation
described in subsection (d)(3)(B);
(20) with respect to amounts expended for medical
assistance provided to an individual described in
subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii)
for a fiscal year unless the State demonstrates to the
satisfaction of the Secretary that the level of State
funds expended for such fiscal year for programs to
enable working individuals with disabilities to work
(other than for such medical assistance) is not less
than the level expended for such programs during the
most recent State fiscal year ending before the date of
the enactment of this paragraph;
(21) with respect to amounts expended for covered
outpatient drugs described in section 1927(d)(2)(C)
(relating to drugs when used for cosmetic purposes or
hair growth), except where medically necessary, and
section 1927(d)(2)(K) (relating to drugs when used for
treatment of sexual or erectile dysfunction);
(22) with respect to amounts expended for medical
assistance for an individual who declares under section
1137(d)(1)(A) to be a citizen or national of the United
States for purposes of establishing eligibility for
benefits under this title, unless the requirement of
section 1902(a)(46)(B) is met;
(23) with respect to amounts expended for medical
assistance for covered outpatient drugs (as defined in
section 1927(k)(2)) for which the prescription was
executed in written (and non-electronic) form unless
the prescription was executed on a tamper-resistant
pad;
(24) if a State is required to implement an asset
verification program under section 1940 and fails to
implement such program in accordance with such section,
with respect to amounts expended by such State for
medical assistance for individuals subject to asset
verification under such section, unless--
(A) the State demonstrates to the Secretary's
satisfaction that the State made a good faith
effort to comply;
(B) not later than 60 days after the date of
a finding that the State is in noncompliance,
the State submits to the Secretary (and the
Secretary approves) a corrective action plan to
remedy such noncompliance; and
(C) not later than 12 months after the date
of such submission (and approval), the State
fulfills the terms of such corrective action
plan;
(25) with respect to any amounts expended for medical
assistance for individuals for whom the State does not
report enrollee encounter data (as defined by the
Secretary) to the Medicaid Statistical Information
System (MSIS) in a timely manner (as determined by the
Secretary);
(26) with respect to any amounts expended for medical
assistance for individuals described in subclause
(VIII) of subsection (a)(10)(A)(i) other than medical
assistance provided through benchmark coverage
described in section 1937(b)(1) or benchmark equivalent
coverage described in section 1937(b)(2); or
(27) with respect to any amounts expended by the
State on the basis of a fee schedule for items
described in section 1861(n) and furnished on or after
January 1, 2019, as determined in the aggregate with
respect to each class of such items as defined by the
Secretary, in excess of the aggregate amount, if any,
that would be paid for such items within such class on
a fee-for-service basis under the program under part B
of title XVIII, including, as applicable, under a
competitive acquisition program under section 1847 in
an area of the State.
Nothing in paragraph (1) shall be construed as permitting a
State to provide services under its plan under this title that
are not reasonable in amount, duration, and scope to achieve
their purpose. Paragraphs (1), (2), (16), (17), and (18) shall
apply with respect to items or services furnished and amounts
expended by or through a managed care entity (as defined in
section 1932(a)(1)(B)) in the same manner as such paragraphs
apply to items or services furnished and amounts expended
directly by the State.
(j) Notwithstanding the preceding provisions of this section,
the amount determined under subsection (a)(1) for any State for
any quarter shall be adjusted in accordance with section 1914.
(k) The Secretary is authorized to provide at the request of
any State (and without cost to such State) such technical and
actuarial assistance as may be necessary to assist such State
to contract with any medicaid managed care organization which
meets the requirements of subsection (m) of this section for
the purpose of providing medical care and services to
individuals who are entitled to medical assistance under this
title.
(m)(1)(A) The term ``medicaid managed care organization''
means a health maintenance organization, an eligible
organization with a contract under section 1876 or a
Medicare+Choice organization with a contract under part C of
title XVIII, a provider sponsored organization, or any other
public or private organization, which meets the requirement of
section 1902(w) and--
(i) makes services it provides to individuals
eligible for benefits under this title accessible to
such individuals, within the area served by the
organization, to the same extent as such services are
made accessible to individuals (eligible for medical
assistance under the State plan) not enrolled with the
organization, and
(ii) has made adequate provision against the risk of
insolvency, which provision is satisfactory to the
State, meets the requirements of subparagraph (C)(i)
(if applicable), and which assures that individuals
eligible for benefits under this title are in no case
held liable for debts of the organization in case of
the organization's insolvency.
An organization that is a qualified health maintenance
organization (as defined in section 1310(d) of the Public
Health Service Act) is deemed to meet the requirements of
clauses (i) and (ii).
(B) The duties and functions of the Secretary, insofar as
they involve making determinations as to whether an
organization is a medicaid managed care organization within the
meaning of subparagraph (A), shall be integrated with the
administration of section 1312 (a) and (b) of the Public Health
Service Act.
(C)(i) Subject to clause (ii), a provision meets the
requirements of this subparagraph for an organization if the
organization meets solvency standards established by the State
for private health maintenance organizations or is licensed or
certified by the State as a risk-bearing entity.
(ii) Clause (i) shall not apply to an organization if--
(I) the organization is not responsible for the
provision (directly or through arrangements with
providers of services) of inpatient hospital services
and physicians' services;
(II) the organization is a public entity;
(III) the solvency of the organization is guaranteed
by the State; or
(IV) the organization is (or is controlled by) one or
more Federally-qualified health centers and meets
solvency standards established by the State for such an
organization.
For purposes of subclause (IV), the term ``control'' means the
possession, whether direct or indirect, of the power to direct
or cause the direction of the management and policies of the
organization through membership, board representation, or an
ownership interest equal to or greater than 50.1 percent.
(2)(A) Except as provided in subparagraphs (B), (C), and (G),
no payment shall be made under this title to a State with
respect to expenditures incurred by it for payment (determined
under a prepaid capitation basis or under any other risk basis)
for services provided by any entity (including a health
insuring organization) which is responsible for the provision
(directly or through arrangements with providers of services)
of inpatient hospital services and any other service described
in paragraph (2), (3), (4), (5), or (7) of section 1905(a) or
for the provision of any three or more of the services
described in such paragraphs unless--
(i) the Secretary has determined that the entity is a
medicaid managed care organization organization as
defined in paragraph (1);
(iii) such services are provided for the benefit of
individuals eligible for benefits under this title in
accordance with a contract between the State and the
entity under which prepaid payments to the entity are
made on an actuarially sound basis and under which the
Secretary must provide prior approval for contracts
providing for expenditures in excess of $1,000,000 for
1998 and, for a subsequent year, the amount established
under this clause for the previous year increased by
the percentage increase in the consumer price index for
all urban consumers over the previous year;
(iv) such contract provides that the Secretary and
the State (or any person or organization designated by
either) shall have the right to audit and inspect any
books and records of the entity (and of any
subcontractor) that pertain (I) to the ability of the
entity to bear the risk of potential financial losses,
or (II) to services performed or determinations of
amounts payable under the contract;
(v) such contract provides that in the entity's
enrollment, reenrollment, or disenrollment of
individuals who are eligible for benefits under this
title and eligible to enroll, reenroll, or disenroll
with the entity pursuant to the contract, the entity
will not discriminate among such individuals on the
basis of their health status or requirements for health
care services;
(vi) such contract (I) permits individuals who have
elected under the plan to enroll with the entity for
provision of such benefits to terminate such enrollment
in accordance with section 1932(a)(4), and (II)
provides for notification in accordance with such
section of each such individual, at the time of the
individual's enrollment, of such right to terminate
such enrollment;
(vii) such contract provides that, in the case of
medically necessary services which were provided (I) to
an individual enrolled with the entity under the
contract and entitled to benefits with respect to such
services under the State's plan and (II) other than
through the organization because the services were
immediately required due to an unforeseen illness,
injury, or condition, either the entity or the State
provides for reimbursement with respect to those
services,
(viii) such contract provides for disclosure of
information in accordance with section 1124 and
paragraph (4) of this subsection;
(ix) such contract provides, in the case of an entity
that has entered into a contract for the provision of
services with a Federally-qualified health center or a
rural health clinic, that the entity shall provide
payment that is not less than the level and amount of
payment which the entity would make for the services if
the services were furnished by a provider which is not
a Federally-qualified health center or a rural health
clinic;
(x) any physician incentive plan that it operates
meets the requirements described in section 1876(i)(8);
(xi) such contract provides for maintenance of
sufficient patient encounter data to identify the
physician who delivers services to patients and for the
provision of such data to the State at a frequency and
level of detail to be specified by the Secretary;
(xii) such contract, and the entity complies with the
applicable requirements of section 1932; and
(xiii) such contract provides that (I)
covered outpatient drugs dispensed to
individuals eligible for medical assistance who
are enrolled with the entity shall be subject
to the same rebate required by the agreement
entered into under section 1927 as the State is
subject to and that the State shall collect
such rebates from manufacturers, (II)
capitation rates paid to the entity shall be
based on actual cost experience related to
rebates and subject to the Federal regulations
requiring actuarially sound rates, and (III)
the entity shall report to the State, on such
timely and periodic basis as specified by the
Secretary in order to include in the
information submitted by the State to a
manufacturer and the Secretary under section
1927(b)(2)(A), information on the total number
of units of each dosage form and strength and
package size by National Drug Code of each
covered outpatient drug dispensed to
individuals eligible for medical assistance who
are enrolled with the entity and for which the
entity is responsible for coverage of such drug
under this subsection (other than covered
outpatient drugs that under subsection (j)(1)
of section 1927 are not subject to the
requirements of that section) and such other
data as the Secretary determines necessary to
carry out this subsection.
(B) Subparagraph (A) except with respect to clause (ix) of
subparagraph (A), does not apply with respect to payments under
this title to a State with respect to expenditures incurred by
it for payment for services provided by an entity which--
(i)(I) received a grant of at least $100,000 in the
fiscal year ending June 30, 1976, under section
329(d)(1)(A) or 330(d)(1) of the Public Health Service
Act, and for the period beginning July 1, 1976, and
ending on the expiration of the period for which
payments are to be made under this title has been the
recipient of a grant under either such section; and
(II) provides to its enrollees, on a prepaid
capitation risk basis or on any other risk basis, all
of the services and benefits described in paragraphs
(1), (2), (3), (4)(C), and (5) of section 1905(a) and,
to the extent required by section 1902(a)(10)(D) to be
provided under a State plan for medical assistance, the
services and benefits described in paragraph (7) of
section 1905(a); or
(ii) is a nonprofit primary health care entity
located in a rural area (as defined by the Appalachian
Regional Commission)--
(I) which received in the fiscal year ending
June 30, 1976, at least $100,000 (by grant,
subgrant, or subcontract) under the Appalachian
Regional Development Act of 1965, and
(II) for the period beginning July 1, 1976,
and ending on the expiration of the period for
which payments are to be made under this title
either has been the recipient of a grant,
subgrant, or subcontract under such Act or has
provided services under a contract (initially
entered into during a year in which the entity
was the recipient of such a grant, subgrant, or
subcontract) with a State agency under this
title on a prepaid capitation risk basis or on
any other risk basis; or
(iii) which has contracted with the single State
agency for the provision of services (but not including
inpatient hospital services) to persons eligible under
this title on a prepaid risk basis prior to 1970.
(G) In the case of an entity which is receiving (and has
received during the previous two years) a grant of at least
$100,000 under section 329(d)(1)(A) or 330(d)(1) of the Public
Health Service Act or is receiving (and has received during the
previous two years) at least $100,000 (by grant, subgrant, or
subcontract) under the Appalachian Regional Development Act of
1965, clause (i) of subparagraph (A) shall not apply.
(H) In the case of an individual who--
(i) in a month is eligible for benefits under this
title and enrolled with a medicaid managed care
organization with a contract under this paragraph or
with a primary care case manager with a contract
described in section 1905(t)(3),
(ii) in the next month (or in the next 2 months) is
not eligible for such benefits, but
(iii) in the succeeding month is again eligible for
such benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the
individual for that succeeding month with the organization
described in clause (i) if the organization continues to have a
contract under this paragraph with the State or with the
manager described in such clause if the manager continues to
have a contract described in section 1905(t)(3) with the State.
(4)(A) Each medicaid managed care organization which is not a
qualified health maintenance organization (as defined in
section 1310(d) of the Public Health Service Act) must report
to the State and, upon request, to the Secretary, the Inspector
General of the Department of Health and Human Services, and the
Comptroller General a description of transactions between the
organization and a party in interest (as defined in section
1318(b) of such Act), including the following transactions:
(i) Any sale or exchange, or leasing of any property
between the organization and such a party.
(ii) Any furnishing for consideration of goods,
services (including management services), or facilities
between the organization and such a party, but not
including salaries paid to employees for services
provided in the normal course of their employment.
(iii) Any lending of money or other extension of
credit between the organization and such a party.
The State or Secretary may require that information reported
respecting an organization which controls, or is controlled by,
or is under common control with, another entity be in the form
of a consolidated financial statement for the organization and
such entity.
(B) Each organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees upon
reasonable request.
(5)(A) If the Secretary determines that an entity with a
contract under this subsection--
(i) fails substantially to provide medically
necessary items and services that are required (under
law or under the contract) to be provided to an
individual covered under the contract, if the failure
has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
(ii) imposes premiums on individuals enrolled under
this subsection in excess of the premiums permitted
under this title;
(iii) acts to discriminate among individuals in
violation of the provision of paragraph (2)(A)(v),
including expulsion or refusal to re-enroll an
individual or engaging in any practice that would
reasonably be expected to have the effect of denying or
discouraging enrollment (except as permitted by this
subsection) by eligible individuals with the
organization whose medical condition or history
indicates a need for substantial future medical
services;
(iv) misrepresents or falsifies information that is
furnished--
(I) to the Secretary or the State under this
subsection, or
(II) to an individual or to any other entity
under this subsection, or
(v) fails to comply with the requirements of section
1876(i)(8),
the Secretary may provide, in addition to any other remedies
available under law, for any of the remedies described in
subparagraph (B).
(B) The remedies described in this subparagraph are--
(i) civil money penalties of not more than $25,000
for each determination under subparagraph (A), or, with
respect to a determination under clause (iii) or
(iv)(I) of such subparagraph, of not more than $100,000
for each such determination, plus, with respect to a
determination under subparagraph (A)(ii), double the
excess amount charged in violation of such subparagraph
(and the excess amount charged shall be deducted from
the penalty and returned to the individual concerned),
and plus, with respect to a determination under
subparagraph (A)(iii), $15,000 for each individual not
enrolled as a result of a practice described in such
subparagraph, or
(ii) denial of payment to the State for medical
assistance furnished under the contract under this
subsection for individuals enrolled after the date the
Secretary notifies the organization of a determination
under subparagraph (A) and until the Secretary is
satisfied that the basis for such determination has
been corrected and is not likely to recur.
The provisions of section 1128A (other than subsections (a) and
(b)) shall apply to a civil money penalty under clause (i) in
the same manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
(6)(A) For purposes of this subsection and section
1902(e)(2)(A), in the case of the State of New Jersey, the term
``contract'' shall be deemed to include an undertaking by the
State agency, in the State plan under this title, to operate a
program meeting all requirements of this subsection.
(B) The undertaking described in subparagraph (A) must
provide--
(i) for the establishment of a separate entity
responsible for the operation of a program meeting the
requirements of this subsection, which entity may be a
subdivision of the State agency administering the State
plan under this title;
(ii) for separate accounting for the funds used to
operate such program; and
(iii) for setting the capitation rates and any other
payment rates for services provided in accordance with
this subsection using a methodology satisfactory to the
Secretary designed to ensure that total Federal
matching payments under this title for such services
will be lower than the matching payments that would be
made for the same services, if provided under the State
plan on a fee for service basis to an actuarially
equivalent population.
(C) The undertaking described in subparagraph (A) shall be
subject to approval (and annual re-approval) by the Secretary
in the same manner as a contract under this subsection.
(D) The undertaking described in subparagraph (A) shall not
be eligible for a waiver under section 1915(b).
(o) Notwithstanding the preceding provisions of this section,
no payment shall be made to a State under the preceding
provisions of this section for expenditures for medical
assistance provided for an individual under its State plan
approved under this title to the extent that a private insurer
(as defined by the Secretary by regulation and including a
group health plan (as defined in section 607(1) of the Employee
Retirement Income Security Act of 1974), a service benefit
plan, and a health maintenance organization) would have been
obligated to provide such assistance but for a provision of its
insurance contract which has the effect of limiting or
excluding such obligation because the individual is eligible
for or is provided medical assistance under the plan.
(p)(1) When a political subdivision of a State makes, for the
State of which it is a political subdivision, or one State
makes, for another State, the enforcement and collection of
rights of support or payment assigned under section 1912,
pursuant to a cooperative arrangement under such section
(either within or outside of such State), there shall be paid
to such political subdivision or such other State from amounts
which would otherwise represent the Federal share of payments
for medical assistance provided to the eligible individuals on
whose behalf such enforcement and collection was made, an
amount equal to 15 percent of any amount collected which is
attributable to such rights of support or payment.
(2) Where more than one jurisdiction is involved in such
enforcement or collection, the amount of the incentive payment
determined under paragraph (1) shall be allocated among the
jurisdictions in a manner to be prescribed by the Secretary.
(q) For the purposes of this section, the term ``State
medicaid fraud control unit'' means a single identifiable
entity of the State government which the Secretary certifies
(and annually recertifies) as meeting the following
requirements:
(1) The entity (A) is a unit of the office of the
State Attorney General or of another department of
State government which possesses statewide authority to
prosecute individuals for criminal violations, (B) is
in a State the constitution of which does not provide
for the criminal prosecution of individuals by a
statewide authority and has formal procedures, approved
by the Secretary, that (i) assure its referral of
suspected criminal violations relating to the program
under this title to the appropriate authority or
authorities in the State for prosecution and (ii)
assure its assistance of, and coordination with, such
authority or authorities in such prosecutions, or (C)
has a formal working relationship with the office of
the State Attorney General and has formal procedures
(including procedures for its referral of suspected
criminal violations to such office) which are approved
by the Secretary and which provide effective
coordination of activities between the entity and such
office with respect to the detection, investigation,
and prosecution of suspected criminal violations
relating to the program under this title.
(2) The entity is separate and distinct from the
single State agency that administers or supervises the
administration of the State plan under this title.
(3) The entity's function is conducting a statewide
program for the investigation and prosecution of
violations of all applicable State laws regarding any
and all aspects of fraud in connection with (A) any
aspect of the provision of medical assistance and the
activities of providers of such assistance under the
State plan under this title; and (B) upon the approval
of the Inspector General of the relevant Federal
agency, any aspect of the provision of health care
services and activities of providers of such services
under any Federal health care program (as defined in
section 1128B(f)(1)), if the suspected fraud or
violation of law in such case or investigation is
primarily related to the State plan under this title.
(4)(A) The entity has--
(i) procedures for reviewing complaints of
abuse or neglect of patients in health care
facilities which receive payments under the
State plan under this title;
(ii) at the option of the entity, procedures
for reviewing complaints of abuse or neglect of
patients residing in board and care facilities;
and
(iii) procedures for acting upon such
complaints under the criminal laws of the State
or for referring such complaints to other State
agencies for action.
(B) For purposes of this paragraph, the term ``board
and care facility'' means a residential setting which
receives payment (regardless of whether such payment is
made under the State plan under this title) from or on
behalf of two or more unrelated adults who reside in
such facility, and for whom one or both of the
following is provided:
(i) Nursing care services provided by, or
under the supervision of, a registered nurse,
licensed practical nurse, or licensed nursing
assistant.
(ii) A substantial amount of personal care
services that assist residents with the
activities of daily living, including personal
hygiene, dressing, bathing, eating, toileting,
ambulation, transfer, positioning, self-
medication, body care, travel to medical
services, essential shopping, meal preparation,
laundry, and housework.
(5) The entity provides for the collection, or
referral for collection to a single State agency, of
overpayments that are made under the State plan or
under any Federal health care program (as so defined)
to health care facilities and that are discovered by
the entity in carrying out its activities. All funds
collected in accordance with this paragraph shall be
credited exclusively to, and available for expenditure
under, the Federal health care program (including the
State plan under this title) that was subject to the
activity that was the basis for the collection.
(6) The entity employs such auditors, attorneys,
investigators, and other necessary personnel and is
organized in such a manner as is necessary to promote
the effective and efficient conduct of the entity's
activities.
(7) The entity submits to the Secretary an
application and annual reports containing such
information as the Secretary determines, by regulation,
to be necessary to determine whether the entity meets
the other requirements of this subsection.
(r)(1) In order to receive payments under subsection (a) for
use of automated data systems in administration of the State
plan under this title, a State must, in addition to meeting the
requirements of paragraph (3), have in operation mechanized
claims processing and information retrieval systems that meet
the requirements of this subsection and that the Secretary has
found--
(A) are adequate to provide efficient, economical,
and effective administration of such State plan;
(B) are compatible with the claims processing and
information retrieval systems used in the
administration of title XVIII, and for this purpose--
(i) have a uniform identification coding
system for providers, other payees, and
beneficiaries under this title or title XVIII;
(ii) provide liaison between States and
carriers and intermediaries with agreements
under title XVIII to facilitate timely exchange
of appropriate data;
(iii) provide for exchange of data between
the States and the Secretary with respect to
persons sanctioned under this title or title
XVIII; and
(iv) effective for claims filed on or after
October 1, 2010, incorporate compatible
methodologies of the National Correct Coding
Initiative administered by the Secretary (or
any successor initiative to promote correct
coding and to control improper coding leading
to inappropriate payment) and such other
methodologies of that Initiative (or such other
national correct coding methodologies) as the
Secretary identifies in accordance with
paragraph (4);
(C) are capable of providing accurate and timely
data;
(D) are complying with the applicable provisions of
part C of title XI;
(E) are designed to receive provider claims in
standard formats to the extent specified by the
Secretary; and
(F) effective for claims filed on or after January 1,
1999, provide for electronic transmission of claims
data in the format specified by the Secretary and
consistent with the Medicaid Statistical Information
System (MSIS) (including detailed individual enrollee
encounter data and other information that the Secretary
may find necessary and including, for data submitted to
the Secretary on or after January 1, 2010, data
elements from the automated data system that the
Secretary determines to be necessary for program
integrity, program oversight, and administration, at
such frequency as the Secretary shall determine).
(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems
must meet the following requirements:
(A) The systems must be capable of developing
provider, physician, and patient profiles which are
sufficient to provide specific information as to the
use of covered types of services and items, including
prescribed drugs.
(B) The State must provide that information on
probable fraud or abuse which is obtained from, or
developed by, the systems, is made available to the
State's medicaid fraud control unit (if any) certified
under subsection (q) of this section.
(C) The systems must meet all performance standards
and other requirements for initial approval developed
by the Secretary.
(3) In order to meet the requirements of this paragraph, a
State must have in operation an eligibility determination
system which provides for data matching through the Public
Assistance Reporting Information System (PARIS) facilitated by
the Secretary (or any successor system), including matching
with medical assistance programs operated by other States.
(4) For purposes of paragraph (1)(B)(iv), the Secretary shall
do the following:
(A) Not later than September 1, 2010:
(i) Identify those methodologies of the
National Correct Coding Initiative administered
by the Secretary (or any successor initiative
to promote correct coding and to control
improper coding leading to inappropriate
payment) which are compatible to claims filed
under this title.
(ii) Identify those methodologies of such
Initiative (or such other national correct
coding methodologies) that should be
incorporated into claims filed under this title
with respect to items or services for which
States provide medical assistance under this
title and no national correct coding
methodologies have been established under such
Initiative with respect to title XVIII.
(iii) Notify States of--
(I) the methodologies identified
under subparagraphs (A) and (B) (and of
any other national correct coding
methodologies identified under
subparagraph (B)); and
(II) how States are to incorporate
such methodologies into claims filed
under this title.
(B) Not later than March 1, 2011, submit a report to
Congress that includes the notice to States under
clause (iii) of subparagraph (A) and an analysis
supporting the identification of the methodologies made
under clauses (i) and (ii) of subparagraph (A).
(s) Notwithstanding the preceding provisions of this section,
no payment shall be made to a State under this section for
expenditures for medical assistance under the State plan
consisting of a designated health service (as defined in
subsection (h)(6) of section 1877) furnished to an individual
on the basis of a referral that would result in the denial of
payment for the service under title XVIII if such title
provided for coverage of such service to the same extent and
under the same terms and conditions as under the State plan,
and subsections (f) and (g)(5) of such section shall apply to a
provider of such a designated health service for which payment
may be made under this title in the same manner as such
subsections apply to a provider of such a service for which
payment may be made under such title.
(t)(1) For purposes of subsection (a)(3)(F), the payments
described in this paragraph to encourage the adoption and use
of certified EHR technology are payments made by the State in
accordance with this subsection --
(A) to Medicaid providers described in paragraph
(2)(A) not in excess of 85 percent of net average
allowable costs (as defined in paragraph (3)(E)) for
certified EHR technology (and support services
including maintenance and training that is for, or is
necessary for the adoption and operation of, such
technology) with respect to such providers; and
(B) to Medicaid providers described in paragraph
(2)(B) not in excess of the maximum amount permitted
under paragraph (5) for the provider involved.
(2) In this subsection and subsection (a)(3)(F), the term
``Medicaid provider'' means--
(A) an eligible professional (as defined in paragraph
(3)(B))--
(i) who is not hospital-based and has at
least 30 percent of the professional's patient
volume (as estimated in accordance with a
methodology established by the Secretary)
attributable to individuals who are receiving
medical assistance under this title;
(ii) who is not described in clause (i), who
is a pediatrician, who is not hospital-based,
and who has at least 20 percent of the
professional's patient volume (as estimated in
accordance with a methodology established by
the Secretary) attributable to individuals who
are receiving medical assistance under this
title; and
(iii) who practices predominantly in a
Federally qualified health center or rural
health clinic and has at least 30 percent of
the professional's patient volume (as estimated
in accordance with a methodology established by
the Secretary) attributable to needy
individuals (as defined in paragraph (3)(F));
and
(B)(i) a children's hospital, or
(ii) an acute-care hospital that is not described in
clause (i) and that has at least 10 percent of the
hospital's patient volume (as estimated in accordance
with a methodology established by the Secretary)
attributable to individuals who are receiving medical
assistance under this title.
An eligible professional shall not qualify as a Medicaid
provider under this subsection unless any right to payment
under sections 1848(o) and 1853(l) with respect to the eligible
professional has been waived in a manner specified by the
Secretary. For purposes of calculating patient volume under
subparagraph (A)(iii), insofar as it is related to
uncompensated care, the Secretary may require the adjustment of
such uncompensated care data so that it would be an appropriate
proxy for charity care, including a downward adjustment to
eliminate bad debt data from uncompensated care. In applying
subparagraphs (A) and (B)(ii), the methodology established by
the Secretary for patient volume shall include individuals
enrolled in a Medicaid managed care plan (under section 1903(m)
or section 1932).
(3) In this subsection and subsection (a)(3)(F):
(A) The term ``certified EHR technology'' means a
qualified electronic health record (as defined in
3000(13) of the Public Health Service Act) that is
certified pursuant to section 3001(c)(5) of such Act as
meeting standards adopted under section 3004 of such
Act that are applicable to the type of record involved
(as determined by the Secretary, such as an ambulatory
electronic health record for office-based physicians or
an inpatient hospital electronic health record for
hospitals).
(B) The term ``eligible professional'' means a--
(i) physician;
(ii) dentist;
(iii) certified nurse mid-wife;
(iv) nurse practitioner; and
(v) physician assistant insofar as the
assistant is practicing in a rural health
clinic that is led by a physician assistant or
is practicing in a Federally qualified health
center that is so led.
(C) The term ``average allowable costs'' means, with
respect to certified EHR technology of Medicaid
providers described in paragraph (2)(A) for--
(i) the first year of payment with respect to
such a provider, the average costs for the
purchase and initial implementation or upgrade
of such technology (and support services
including training that is for, or is necessary
for the adoption and initial operation of, such
technology) for such providers, as determined
by the Secretary based upon studies conducted
under paragraph (4)(C); and
(ii) a subsequent year of payment with
respect to such a provider, the average costs
not described in clause (i) relating to the
operation, maintenance, and use of such
technology for such providers, as determined by
the Secretary based upon studies conducted
under paragraph (4)(C).
(D) The term ``hospital-based'' means, with respect
to an eligible professional, a professional (such as a
pathologist, anesthesiologist, or emergency physician)
who furnishes substantially all of the individual's
professional services in a hospital inpatient or
emergency room setting and through the use of the
facilities and equipment, including qualified
electronic health records, of the hospital. The
determination of whether an eligible professional is a
hospital-based eligible professional shall be made on
the basis of the site of service (as defined by the
Secretary) and without regard to any employment or
billing arrangement between the eligible professional
and any other provider.
(E) The term ``net average allowable costs'' means,
with respect to a Medicaid provider described in
paragraph (2)(A), average allowable costs reduced by
the average payment the Secretary estimates will be
made to such Medicaid providers (determined on a
percentage or other basis for such classes or types of
providers as the Secretary may specify) from other
sources (other than under this subsection, or by the
Federal government or a State or local government) that
is directly attributable to payment for certified EHR
technology or support services described in
subparagraph (C).
(F) The term ``needy individual'' means, with respect
to a Medicaid provider, an individual--
(i) who is receiving assistance under this
title;
(ii) who is receiving assistance under title
XXI;
(iii) who is furnished uncompensated care by
the provider; or
(iv) for whom charges are reduced by the
provider on a sliding scale basis based on an
individual's ability to pay.
(4)(A) With respect to a Medicaid provider described in
paragraph (2)(A), subject to subparagraph (B), in no case
shall--
(i) the net average allowable costs under
this subsection for the first year of payment
(which may not be later than 2016), which is
intended to cover the costs described in
paragraph (3)(C)(i), exceed $25,000 (or such
lesser amount as the Secretary determines based
on studies conducted under subparagraph (C));
(ii) the net average allowable costs under
this subsection for a subsequent year of
payment, which is intended to cover costs
described in paragraph (3)(C)(ii), exceed
$10,000; and
(iii) payments be made for costs described in
clause (ii) after 2021 or over a period of
longer than 5 years.
(B) In the case of Medicaid provider described in paragraph
(2)(A)(ii), the dollar amounts specified in subparagraph (A)
shall be \2/3\ of the dollar amounts otherwise specified.
(C) For the purposes of determining average allowable costs
under this subsection, the Secretary shall study the average
costs to Medicaid providers described in paragraph (2)(A) of
purchase and initial implementation and upgrade of certified
EHR technology described in paragraph (3)(C)(i) and the average
costs to such providers of operations, maintenance, and use of
such technology described in paragraph (3)(C)(ii). In
determining such costs for such providers, the Secretary may
utilize studies of such amounts submitted by States.
(5)(A) In no case shall the payments described in paragraph
(1)(B) with respect to a Medicaid provider described in
paragraph (2)(B) exceed--
(i) in the aggregate the product of--
(I) the overall hospital EHR amount
for the provider computed under
subparagraph (B); and
(II) the Medicaid share for such
provider computed under subparagraph
(C);
(ii) in any year 50 percent of the product described
in clause (i); and
(iii) in any 2-year period 90 percent of such
product.
(B) For purposes of this paragraph, the overall hospital EHR
amount, with respect to a Medicaid provider, is the sum of the
applicable amounts specified in section 1886(n)(2)(A) for such
provider for the first 4 payment years (as estimated by the
Secretary) determined as if the Medicare share specified in
clause (ii) of such section were 1. The Secretary shall
establish, in consultation with the State, the overall hospital
EHR amount for each such Medicaid provider eligible for
payments under paragraph (1)(B). For purposes of this
subparagraph in computing the amounts under section
1886(n)(2)(C) for payment years after the first payment year,
the Secretary shall assume that in subsequent payment years
discharges increase at the average annual rate of growth of the
most recent 3 years for which discharge data are available per
year.
(C) The Medicaid share computed under this subparagraph, for
a Medicaid provider for a period specified by the Secretary,
shall be calculated in the same manner as the Medicare share
under section 1886(n)(2)(D) for such a hospital and period,
except that there shall be substituted for the numerator under
clause (i) of such section the amount that is equal to the
number of inpatient-bed-days (as established by the Secretary)
which are attributable to individuals who are receiving medical
assistance under this title and who are not described in
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under
the previous sentence, the Secretary shall take into account
inpatient-bed-days attributable to inpatient-bed-days that are
paid for individuals enrolled in a Medicaid managed care plan
(under section 1903(m) or section 1932).
(D) In no case may the payments described in paragraph (1)(B)
with respect to a Medicaid provider described in paragraph
(2)(B) be paid--
(i) for any year beginning after 2016 unless the
provider has been provided payment under paragraph
(1)(B) for the previous year; and
(ii) over a period of more than 6 years of payment.
(6) Payments described in paragraph (1) are not in accordance
with this subsection unless the following requirements are met:
(A)(i) The State provides assurances satisfactory to
the Secretary that amounts received under subsection
(a)(3)(F) with respect to payments to a Medicaid
provider are paid, subject to clause (ii), directly to
such provider (or to an employer or facility to which
such provider has assigned payments) without any
deduction or rebate.
(ii) Amounts described in clause (i) may also be paid
to an entity promoting the adoption of certified EHR
technology, as designated by the State, if
participation in such a payment arrangement is
voluntary for the eligible professional involved and if
such entity does not retain more than 5 percent of such
payments for costs not related to certified EHR
technology (and support services including maintenance
and training) that is for, or is necessary for the
operation of, such technology.
(B) A Medicaid provider described in paragraph (2)(A)
is responsible for payment of the remaining 15 percent
of the net average allowable cost and shall be
determined to have met such responsibility to the
extent that the payment to the Medicaid provider is not
in excess of 85 percent of the net average allowable
cost.
(C)(i) Subject to clause (ii), with respect to
payments to a Medicaid provider--
(I) for the first year of payment to the
Medicaid provider under this subsection, the
Medicaid provider demonstrates that it is
engaged in efforts to adopt, implement, or
upgrade certified EHR technology; and
(II) for a year of payment, other than the
first year of payment to the Medicaid provider
under this subsection, the Medicaid provider
demonstrates meaningful use of certified EHR
technology through a means that is approved by
the State and acceptable to the Secretary, and
that may be based upon the methodologies
applied under section 1848(o) or 1886(n).
(ii) In the case of a Medicaid provider who has
completed adopting, implementing, or upgrading such
technology prior to the first year of payment to the
Medicaid provider under this subsection, clause (i)(I)
shall not apply and clause (i)(II) shall apply to each
year of payment to the Medicaid provider under this
subsection, including the first year of payment.
(D) To the extent specified by the Secretary, the
certified EHR technology is compatible with State or
Federal administrative management systems.
For purposes of subparagraph (B), a Medicaid provider described
in paragraph (2)(A) may accept payments for the costs described
in such subparagraph from a State or local government. For
purposes of subparagraph (C), in establishing the means
described in such subparagraph, which may include clinical
quality reporting to the State, the State shall ensure that
populations with unique needs, such as children, are
appropriately addressed.
(7) With respect to Medicaid providers described in paragraph
(2)(A), the Secretary shall ensure coordination of payment with
respect to such providers under sections 1848(o) and 1853(l)
and under this subsection to assure no duplication of funding.
Such coordination shall include, to the extent practicable, a
data matching process between State Medicaid agencies and the
Centers for Medicare & Medicaid Services using national
provider identifiers. For such purposes, the Secretary may
require the submission of such data relating to payments to
such Medicaid providers as the Secretary may specify.
(8) In carrying out paragraph (6)(C), the State and Secretary
shall seek, to the maximum extent practicable, to avoid
duplicative requirements from Federal and State governments to
demonstrate meaningful use of certified EHR technology under
this title and title XVIII. In doing so, the Secretary may deem
satisfaction of requirements for such meaningful use for a
payment year under title XVIII to be sufficient to qualify as
meaningful use under this subsection. The Secretary may also
specify the reporting periods under this subsection in order to
carry out this paragraph.
(9) In order to be provided Federal financial participation
under subsection (a)(3)(F)(ii), a State must demonstrate to the
satisfaction of the Secretary, that the State--
(A) is using the funds provided for the purposes of
administering payments under this subsection, including
tracking of meaningful use by Medicaid providers;
(B) is conducting adequate oversight of the program
under this subsection, including routine tracking of
meaningful use attestations and reporting mechanisms;
and
(C) is pursuing initiatives to encourage the adoption
of certified EHR technology to promote health care
quality and the exchange of health care information
under this title, subject to applicable laws and
regulations governing such exchange.
(10) The Secretary shall periodically submit reports to the
Committee on Energy and Commerce of the House of
Representatives and the Committee on Finance of the Senate on
status, progress, and oversight of payments described in
paragraph (1), including steps taken to carry out paragraph
(7). Such reports shall also describe the extent of adoption of
certified EHR technology among Medicaid providers resulting
from the provisions of this subsection and any improvements in
health outcomes, clinical quality, or efficiency resulting from
such adoption.
(u)(1)(A) Notwithstanding subsection (a)(1), if the ratio of
a State's erroneous excess payments for medical assistance (as
defined in subparagraph (D)) to its total expenditures for
medical assistance under the State plan approved under this
title exceeds 0.03, for the period consisting of the third and
fourth quarters of fiscal year 1983, or for any full fiscal
year thereafter, then the Secretary shall make no payment for
such period or fiscal year with respect to so much of such
erroneous excess payments as exceeds such allowable error rate
of 0.03.
(B) The Secretary may waive, in certain limited cases, all or
part of the reduction required under subparagraph (A) with
respect to any State if such State is unable to reach the
allowable error rate for a period or fiscal year despite a good
faith effort by such State.
(C) In estimating the amount to be paid to a State under
subsection (d), the Secretary shall take into consideration the
limitation on Federal financial participation imposed by
subparagraph (A) and shall reduce the estimate he makes under
subsection (d)(1), for purposes of payment to the State under
subsection (d)(3), in light of any expected erroneous excess
payments for medical assistance (estimated in accordance with
such criteria, including sampling procedures, as he may
prescribe and subject to subsequent adjustment, if necessary,
under subsection (d)(2)).
(D)(i) For purposes of this subsection, the term ``erroneous
excess payments for medical assistance'' means the total of--
(I) payments under the State plan with respect to
ineligible individuals and families, and
(II) overpayments on behalf of eligible individuals
and families by reason of error in determining the
amount of expenditures for medical care required of an
individual or family as a condition of eligibility.
(ii) In determining the amount of erroneous excess payments
for medical assistance to an ineligible individual or family
under clause (i)(I), if such ineligibility is the result of an
error in determining the amount of the resources of such
individual or family, the amount of the erroneous excess
payment shall be the smaller of (I) the amount of the payment
with respect to such individual or family, or (II) the
difference between the actual amount of such resources and the
allowable resource level established under the State plan.
(iii) In determining the amount of erroneous excess payments
for medical assistance to an individual or family under clause
(i)(II), the amount of the erroneous excess payment shall be
the smaller of (I) the amount of the payment on behalf of the
individual or family, or (II) the difference between the actual
amount incurred for medical care by the individual or family
and the amount which should have been incurred in order to
establish eligibility for medical assistance.
(iv) In determining the amount of erroneous excess payments,
there shall not be included any error resulting from a failure
of an individual to cooperate or give correct information with
respect to third-party liability as required under section
1912(a)(1)(C) or 402(a)(26)(C) or with respect to payments made
in violation of section 1906.
(v) In determining the amount of erroneous excess payments,
there shall not be included any erroneous payments made for
ambulatory prenatal care provided during a presumptive
eligibility period (as defined in section 1920(b)(1)), for
items and services described in subsection (a) of section 1920A
provided to a child during a presumptive eligibility period
under such section, for medical assistance provided to an
individual described in subsection (a) of section 1920B during
a presumptive eligibility period under such section, or for
medical assistance provided to an individual during a
presumptive eligibility period resulting from a determination
of presumptive eligibility made by a hospital that elects under
section 1902(a)(47)(B) to be a qualified entity for such
purpose.
(E) For purposes of subparagraph (D), there shall be
excluded, in determining both erroneous excess payments for
medical assistance and total expenditures for medical
assistance--
(i) payments with respect to any individual whose
eligibility therefor was determined exclusively by the
Secretary under an agreement pursuant to section 1634
and such other classes of individuals as the Secretary
may by regulation prescribe whose eligibility was
determined in part under such an agreement; and
(ii) payments made as the result of a technical
error.
(2) The State agency administering the plan approved under
this title shall, at such times and in such form as the
Secretary may specify, provide information on the rates of
erroneous excess payments made (or expected, with respect to
future periods specified by the Secretary) in connection with
its administration of such plan, together with any other data
he requests that are reasonably necessary for him to carry out
the provisions of this subsection.
(3)(A) If a State fails to cooperate with the Secretary in
providing information necessary to carry out this subsection,
the Secretary, directly or through contractual or such other
arrangements as he may find appropriate, shall establish the
error rates for that State on the basis of the best data
reasonably available to him and in accordance with such
techniques for sampling and estimating as he finds appropriate.
(B) In any case in which it is necessary for the Secretary to
exercise his authority under subparagraph (A) to determine a
State's error rates for a fiscal year, the amount that would
otherwise be payable to such State under this title for
quarters in such year shall be reduced by the costs incurred by
the Secretary in making (directly or otherwise) such
determination.
(4) This subsection shall not apply with respect to Puerto
Rico, Guam, the Virgin Islands, the Northern Mariana Islands,
or American Samoa.
(v)(1) Notwithstanding the preceding provisions of this
section, except as provided in paragraphs (2) and (4), no
payment may be made to a State under this section for medical
assistance furnished to an alien who is not lawfully admitted
for permanent residence or otherwise permanently residing in
the United States under color of law.
(2) Payment shall be made under this section for care and
services that are furnished to an alien described in paragraph
(1) only if--
(A) such care and services are necessary for the
treatment of an emergency medical condition of the
alien,
(B) such alien otherwise meets the eligibility
requirements for medical assistance under the State
plan approved under this title (other than the
requirement of the receipt of aid or assistance under
title IV, supplemental security income benefits under
title XVI, or a State supplementary payment), and
(C) such care and services are not related to an
organ transplant procedure.
(3) For purposes of this subsection, the term ``emergency
medical condition'' means a medical condition (including
emergency labor and delivery) manifesting itself by acute
symptoms of sufficient severity (including severe pain) such
that the absence of immediate medical attention could
reasonably be expected to result in--
(A) placing the patient's health in serious jeopardy,
(B) serious impairment to bodily functions, or
(C) serious dysfunction of any bodily organ or part.
(4)(A) A State may elect (in a plan amendment under this
title) to provide medical assistance under this title,
notwithstanding sections 401(a), 402(b), 403, and 421 of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996, to children and pregnant women who are lawfully
residing in the United States (including battered individuals
described in section 431(c) of such Act) and who are otherwise
eligible for such assistance, within either or both of the
following eligibility categories:
(i) Pregnant women.--Women during pregnancy (and
during the 60-day period beginning on the last day of
the pregnancy).
(ii) Children.--Individuals under 21 years of age,
including optional targeted low-income children
described in section 1905(u)(2)(B).
(B) In the case of a State that has elected to provide
medical assistance to a category of aliens under subparagraph
(A), no debt shall accrue under an affidavit of support against
any sponsor of such an alien on the basis of provision of
assistance to such category and the cost of such assistance
shall not be considered as an unreimbursed cost.
(C) As part of the State's ongoing eligibility
redetermination requirements and procedures for an individual
provided medical assistance as a result of an election by the
State under subparagraph (A), a State shall verify that the
individual continues to lawfully reside in the United States
using the documentation presented to the State by the
individual on initial enrollment. If the State cannot
successfully verify that the individual is lawfully residing in
the United States in this manner, it shall require that the
individual provide the State with further documentation or
other evidence to verify that the individual is lawfully
residing in the United States.
(w)(1)(A) Notwithstanding the previous provisions of this
section, for purposes of determining the amount to be paid to a
State (as defined in paragraph (7)(D)) under subsection (a)(1)
for quarters in any fiscal year, the total amount expended
during such fiscal year as medical assistance under the State
plan (as determined without regard to this subsection) shall be
reduced by the sum of any revenues received by the State (or by
a unit of local government in the State) during the fiscal
year--
(i) from provider-related donations (as defined in
paragraph (2)(A)), other than--
(I) bona fide provider-related donations (as
defined in paragraph (2)(B)), and
(II) donations described in paragraph (2)(C);
(ii) from health care related taxes (as defined in
paragraph (3)(A)), other than broad-based health care
related taxes (as defined in paragraph (3)(B));
(iii) from a broad-based health care related tax, if
there is in effect a hold harmless provision (described
in paragraph (4)) with respect to the tax; or
(iv) only with respect to State fiscal years (or
portions thereof) occurring on or after January 1,
1992, and before October 1, 1995, from broad-based
health care related taxes to the extent the amount of
such taxes collected exceeds the limit established
under paragraph (5).
(B) Notwithstanding the previous provisions of this section,
for purposes of determining the amount to be paid to a State
under subsection (a)(7) for all quarters in a Federal fiscal
year (beginning with fiscal year 1993), the total amount
expended during the fiscal year for administrative expenditures
under the State plan (as determined without regard to this
subsection) shall be reduced by the sum of any revenues
received by the State (or by a unit of local government in the
State) during such quarters from donations described in
paragraph (2)(C), to the extent the amount of such donations
exceeds 10 percent of the amounts expended under the State plan
under this title during the fiscal year for purposes described
in paragraphs (2), (3), (4), (6), and (7) of subsection (a).
(C)(i) Except as otherwise provided in clause (ii),
subparagraph (A)(i) shall apply to donations received on or
after January 1, 1992.
(ii) Subject to the limits described in clause (iii) and
subparagraph (E), subparagraph (A)(i) shall not apply to
donations received before the effective date specified in
subparagraph (F) if such donations are received under programs
in effect or as described in State plan amendments or related
documents submitted to the Secretary by September 30, 1991, and
applicable to State fiscal year 1992, as demonstrated by State
plan amendments, written agreements, State budget
documentation, or other documentary evidence in existence on
that date.
(iii) In applying clause (ii) in the case of donations
received in State fiscal year 1993, the maximum amount of such
donations to which such clause may be applied may not exceed
the total amount of such donations received in the
corresponding period in State fiscal year 1992 (or not later
than 5 days after the last day of the corresponding period).
(D)(i) Except as otherwise provided in clause (ii),
subparagraphs (A)(ii) and (A)(iii) shall apply to taxes
received on or after January 1, 1992.
(ii) Subparagraphs (A)(ii) and (A)(iii) shall not apply to
impermissible taxes (as defined in clause (iii)) received
before the effective date specified in subparagraph (F) to the
extent the taxes (including the tax rate or base) were in
effect, or the legislation or regulations imposing such taxes
were enacted or adopted, as of November 22, 1991.
(iii) In this subparagraph and subparagraph (E), the term
``impermissible tax'' means a health care related tax for which
a reduction may be made under clause (ii) or (iii) of
subparagraph (A).
(E)(i) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii)
and (D)(ii) for the portion of State fiscal year 1992 occurring
during calendar year 1992 exceed the limit under paragraph (5)
minus the total amount of broad-based health care related taxes
received in the portion of that fiscal year.
(ii) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii)
and (D)(ii) for State fiscal year 1993 exceed the limit under
paragraph (5) minus the total amount of broad-based health care
related taxes received in that fiscal year.
(F) In this paragraph in the case of a State--
(i) except as provided in clause (iii), with a State
fiscal year beginning on or before July 1, the
effective date is October 1, 1992,
(ii) except as provided in clause (iii), with a State
fiscal year that begins after July 1, the effective
date is January 1, 1993, or
(iii) with a State legislature which is not scheduled
to have a regular legislative session in 1992, with a
State legislature which is not scheduled to have a
regular legislative session in 1993, or with a
provider-specific tax enacted on November 4, 1991, the
effective date is July 1, 1993.
(2)(A) In this subsection (except as provided in paragraph
(6)), the term ``provider-related donation'' means any donation
or other voluntary payment (whether in cash or in kind) made
(directly or indirectly) to a State or unit of local government
by--
(i) a health care provider (as defined in paragraph
(7)(B)),
(ii) an entity related to a health care provider (as
defined in paragraph (7)(C)), or
(iii) an entity providing goods or services under the
State plan for which payment is made to the State under
paragraph (2), (3), (4), (6), or (7) of subsection (a).
(B) For purposes of paragraph (1)(A)(i)(I), the term ``bona
fide provider-related donation'' means a provider-related
donation that has no direct or indirect relationship (as
determined by the Secretary) to payments made under this title
to that provider, to providers furnishing the same class of
items and services as that provider, or to any related entity,
as established by the State to the satisfaction of the
Secretary. The Secretary may by regulation specify types of
provider-related donations described in the previous sentence
that will be considered to be bona fide provider-related
donations.
(C) For purposes of paragraph (1)(A)(i)(II), donations
described in this subparagraph are funds expended by a
hospital, clinic, or similar entity for the direct cost
(including costs of training and of preparing and distributing
outreach materials) of State or local agency personnel who are
stationed at the hospital, clinic, or entity to determine the
eligibility of individuals for medical assistance under this
title and to provide outreach services to eligible or
potentially eligible individuals.
(3)(A) In this subsection (except as provided in paragraph
(6)), the term ``health care related tax'' means a tax (as
defined in paragraph (7)(F)) that--
(i) is related to health care items or services, or
to the provision of, the authority to provide, or
payment for, such items or services, or
(ii) is not limited to such items or services but
provides for treatment of individuals or entities that
are providing or paying for such items or services that
is different from the treatment provided to other
individuals or entities.
In applying clause (i), a tax is considered to relate to health
care items or services if at least 85 percent of the burden of
such tax falls on health care providers.
(B) In this subsection, the term ``broad-based health care
related tax'' means a health care related tax which is imposed
with respect to a class of health care items or services (as
described in paragraph (7)(A)) or with respect to providers of
such items or services and which, except as provided in
subparagraphs (D), (E), and (F)--
(i) is imposed at least with respect to all items or
services in the class furnished by all non-Federal,
nonpublic providers in the State (or, in the case of a
tax imposed by a unit of local government, the area
over which the unit has jurisdiction) or is imposed
with respect to all non-Federal, nonpublic providers in
the class; and
(ii) is imposed uniformly (in accordance with
subparagraph (C)).
(C)(i) Subject to clause (ii), for purposes of subparagraph
(B)(ii), a tax is considered to be imposed uniformly if--
(I) in the case of a tax consisting of a licensing
fee or similar tax on a class of health care items or
services (or providers of such items or services), the
amount of the tax imposed is the same for every
provider providing items or services within the class;
(II) in the case of a tax consisting of a licensing
fee or similar tax imposed on a class of health care
items or services (or providers of such services) on
the basis of the number of beds (licensed or otherwise)
of the provider, the amount of the tax is the same for
each bed of each provider of such items or services in
the class;
(III) in the case of a tax based on revenues or
receipts with respect to a class of items or services
(or providers of items or services) the tax is imposed
at a uniform rate for all items and services (or
providers of such items of services) in the class on
all the gross revenues or receipts, or net operating
revenues, relating to the provision of all such items
or services (or all such providers) in the State (or,
in the case of a tax imposed by a unit of local
government within the State, in the area over which the
unit has jurisdiction); or
(IV) in the case of any other tax, the State
establishes to the satisfaction of the Secretary that
the tax is imposed uniformly.
(ii) Subject to subparagraphs (D) and (E), a tax imposed with
respect to a class of health care items and services is not
considered to be imposed uniformly if the tax provides for any
credits, exclusions, or deductions which have as their purpose
or effect the return to providers of all or a portion of the
tax paid in a manner that is inconsistent with subclauses (I)
and (II) of subparagraph (E)(ii) or provides for a hold
harmless provision described in paragraph (4).
(D) A tax imposed with respect to a class of health care
items and services is considered to be imposed uniformly--
(i) notwithstanding that the tax is not imposed with
respect to items or services (or the providers thereof)
for which payment is made under a State plan under this
title or title XVIII, or
(ii) in the case of a tax described in subparagraph
(C)(i)(III), notwithstanding that the tax provides for
exclusion (in whole or in part) of revenues or receipts
from a State plan under this title or title XVIII.
(E)(i) A State may submit an application to the Secretary
requesting that the Secretary treat a tax as a broad-based
health care related tax, notwithstanding that the tax does not
apply to all health care items or services in class (or all
providers of such items and services), provides for a credit,
deduction, or exclusion, is not applied uniformly, or otherwise
does not meet the requirements of subparagraph (B) or (C).
Permissible waivers may include exemptions for rural or sole-
community providers.
(ii) The Secretary shall approve such an application if the
State establishes to the satisfaction of the Secretary that--
(I) the net impact of the tax and associated
expenditures under this title as proposed by the State
is generally redistributive in nature, and
(II) the amount of the tax is not directly correlated
to payments under this title for items or services with
respect to which the tax is imposed.
The Secretary shall by regulation specify types of credits,
exclusions, and deductions that will be considered to meet the
requirements of this subparagraph.
(F) In no case shall a tax not qualify as a broad-based
health care related tax under this paragraph because it does
not apply to a hospital that is described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code and that does not accept
payment under the State plan under this title or under title
XVIII.
(4) For purposes of paragraph (1)(A)(iii), there is in effect
a hold harmless provision with respect to a broad-based health
care related tax imposed with respect to a class of items or
services if the Secretary determines that any of the following
applies:
(A) The State or other unit of government imposing
the tax provides (directly or indirectly) for a payment
(other than under this title) to taxpayers and the
amount of such payment is positively correlated either
to the amount of such tax or to the difference between
the amount of the tax and the amount of payment under
the State plan.
(B) All or any portion of the payment made under this
title to the taxpayer varies based only upon the amount
of the total tax paid.
(C)(i) The State or other unit of government imposing
the tax provides (directly or indirectly) for any
payment, offset, or waiver that guarantees to hold
taxpayers harmless for any portion of the costs of the
tax.
(ii) For purposes of clause (i), a determination of
the existence of an indirect guarantee shall be made
under paragraph (3)(i) of section 433.68(f) of title
42, Code of Federal Regulations, as in effect on
November 1, 2006, except that for portions of fiscal
years beginning on or after January 1, 2008, and before
October 1, 2011, ``5.5 percent'' shall be substituted
for ``6 percent'' each place it appears.
The provisions of this paragraph shall not prevent use of the
tax to reimburse health care providers in a class for
expenditures under this title nor preclude States from relying
on such reimbursement to justify or explain the tax in the
legislative process.
(5)(A) For purposes of this subsection, the limit under this
subparagraph with respect to a State is an amount equal to 25
percent (or, if greater, the State base percentage, as defined
in subparagraph (B)) of the non-Federal share of the total
amount expended under the State plan during a State fiscal year
(or portion thereof), as it would be determined pursuant to
paragraph (1)(A) without regard to paragraph (1)(A)(iv).
(B)(i) In subparagraph (A), the term ``State base
percentage'' means, with respect to a State, an amount
(expressed as a percentage) equal to--
(I) the total of the amount of health care related
taxes (whether or not broad-based) and the amount of
provider-related donations (whether or not bona fide)
projected to be collected (in accordance with clause
(ii)) during State fiscal year 1992, divided by
(II) the non-Federal share of the total amount
estimated to be expended under the State plan during
such State fiscal year.
(ii) For purposes of clause (i)(I), in the case of a tax that
is not in effect throughout State fiscal year 1992 or the rate
(or base) of which is increased during such fiscal year, the
Secretary shall project the amount to be collected during such
fiscal year as if the tax (or increase) were in effect during
the entire State fiscal year.
(C)(i) The total amount of health care related taxes under
subparagraph (B)(i)(I) shall be determined by the Secretary
based on only those taxes (including the tax rate or base)
which were in effect, or for which legislation or regulations
imposing such taxes were enacted or adopted, as of November 22,
1991.
(ii) The amount of provider-related donations under
subparagraph (B)(i)(I) shall be determined by the Secretary
based on programs in effect on September 30, 1991, and
applicable to State fiscal year 1992, as demonstrated by State
plan amendments, written agreements, State budget
documentation, or other documentary evidence in existence on
that date.
(iii) The amount of expenditures described in subparagraph
(B)(i)(II) shall be determined by the Secretary based on the
best data available as of the date of the enactment of this
subsection.
(6)(A) Notwithstanding the provisions of this subsection, the
Secretary may not restrict States' use of funds where such
funds are derived from State or local taxes (or funds
appropriated to State university teaching hospitals)
transferred from or certified by units of government within a
State as the non-Federal share of expenditures under this
title, regardless of whether the unit of government is also a
health care provider, except as provided in section 1902(a)(2),
unless the transferred funds are derived by the unit of
government from donations or taxes that would not otherwise be
recognized as the non-Federal share under this section.
(B) For purposes of this subsection, funds the use of which
the Secretary may not restrict under subparagraph (A) shall not
be considered to be a provider-related donation or a health
care related tax.
(7) For purposes of this subsection:
(A) Each of the following shall be considered a
separate class of health care items and services:
(i) Inpatient hospital services.
(ii) Outpatient hospital services.
(iii) Nursing facility services (other than
services of intermediate care facilities for
the mentally retarded).
(iv) Services of intermediate care facilities
for the mentally retarded.
(v) Physicians' services.
(vi) Home health care services.
(vii) Outpatient prescription drugs.
(viii) Services of managed care organizations
(including health maintenance organizations,
preferred provider organizations, and such
other similar organizations as the Secretary
may specify by regulation).
(ix) Such other classification of health care
items and services consistent with this
subparagraph as the Secretary may establish by
regulation.
(B) The term ``health care provider'' means an
individual or person that receives payments for the
provision of health care items or services.
(C) An entity is considered to be ``related'' to a
health care provider if the entity--
(i) is an organization, association,
corporation or partnership formed by or on
behalf of health care providers;
(ii) is a person with an ownership or control
interest (as defined in section 1124(a)(3)) in
the provider;
(iii) is the employee, spouse, parent, child,
or sibling of the provider (or of a person
described in clause (ii)); or
(iv) has a similar, close relationship (as
defined in regulations) to the provider.
(D) The term ``State'' means only the 50 States and
the District of Columbia but does not include any State
whose entire program under this title is operated under
a waiver granted under section 1115.
(E) The ``State fiscal year'' means, with respect to
a specified year, a State fiscal year ending in that
specified year.
(F) The term ``tax'' includes any licensing fee,
assessment, or other mandatory payment, but does not
include payment of a criminal or civil fine or penalty
(other than a fine or penalty imposed in lieu of or
instead of a fee, assessment, or other mandatory
payment).
(G) The term ``unit of local government'' means, with
respect to a State, a city, county, special purpose
district, or other governmental unit in the State.
(x)(1) For purposes of section 1902(a)(46)(B)(i), the
requirement of this subsection is, with respect to an
individual declaring to be a citizen or national of the United
States, that, subject to paragraph (2), there is presented
satisfactory documentary evidence of citizenship or nationality
(as defined in paragraph (3)) of the individual.
(2) The requirement of paragraph (1) shall not apply to an
individual declaring to be a citizen or national of the United
States who is eligible for medical assistance under this
title--
(A) and is entitled to or enrolled for benefits under
any part of title XVIII;
(B) and is receiving--
(i) disability insurance benefits under
section 223 or monthly insurance benefits under
section 202 based on such individual's
disability (as defined in section 223(d)); or
(ii) supplemental security income benefits
under title XVI;
(C) and with respect to whom--
(i) child welfare services are made available
under part B of title IV on the basis of being
a child in foster care; or
(ii) adoption or foster care assistance is
made available under part E of title IV;
(D) pursuant to the application of section 1902(e)(4)
(and, in the case of an individual who is eligible for
medical assistance on such basis, the individual shall
be deemed to have provided satisfactory documentary
evidence of citizenship or nationality and shall not be
required to provide further documentary evidence on any
date that occurs during or after the period in which
the individual is eligible for medical assistance on
such basis); or
(E) on such basis as the Secretary may specify under
which satisfactory documentary evidence of citizenship
or nationality has been previously presented.
(3)(A) For purposes of this subsection, the term
``satisfactory documentary evidence of citizenship or
nationality'' means--
(i) any document described in subparagraph (B); or
(ii) a document described in subparagraph (C) and a
document described in subparagraph (D).
(B) The following are documents described in this
subparagraph:
(i) A United States passport.
(ii) Form N-550 or N-570 (Certificate of
Naturalization).
(iii) Form N-560 or N-561 (Certificate of United
States Citizenship).
(iv) A valid State-issued driver's license or other
identity document described in section 274A(b)(1)(D) of
the Immigration and Nationality Act, but only if the
State issuing the license or such document requires
proof of United States citizenship before issuance of
such license or document or obtains a social security
number from the applicant and verifies before
certification that such number is valid and assigned to
the applicant who is a citizen.
(v)(I) Except as provided in subclause (II), a
document issued by a federally recognized Indian tribe
evidencing membership or enrollment in, or affiliation
with, such tribe (such as a tribal enrollment card or
certificate of degree of Indian blood).
(II) With respect to those federally recognized
Indian tribes located within States having an
international border whose membership includes
individuals who are not citizens of the United States,
the Secretary shall, after consulting with such tribes,
issue regulations authorizing the presentation of such
other forms of documentation (including tribal
documentation, if appropriate) that the Secretary
determines to be satisfactory documentary evidence of
citizenship or nationality for purposes of satisfying
the requirement of this subsection.
(vi) Such other document as the Secretary may
specify, by regulation, that provides proof of United
States citizenship or nationality and that provides a
reliable means of documentation of personal identity.
(C) The following are documents described in this
subparagraph:
(i) A certificate of birth in the United States.
(ii) Form FS-545 or Form DS-1350 (Certification of
Birth Abroad).
(iii) Form I-197 (United States Citizen
Identification Card).
(iv) Form FS-240 (Report of Birth Abroad of a Citizen
of the United States).
(v) Such other document (not described in
subparagraph (B)(iv)) as the Secretary may specify that
provides proof of United States citizenship or
nationality.
(D) The following are documents described in this
subparagraph:
(i) Any identity document described in section
274A(b)(1)(D) of the Immigration and Nationality Act.
(ii) Any other documentation of personal identity of
such other type as the Secretary finds, by regulation,
provides a reliable means of identification.
(E) A reference in this paragraph to a form includes a
reference to any successor form.
(4) In the case of an individual declaring to be a citizen or
national of the United States with respect to whom a State
requires the presentation of satisfactory documentary evidence
of citizenship or nationality under section 1902(a)(46)(B)(i),
the individual shall be provided at least the reasonable
opportunity to present satisfactory documentary evidence of
citizenship or nationality under this subsection as is provided
under clauses (i) and (ii) of section 1137(d)(4)(A) to an
individual for the submittal to the State of evidence
indicating a satisfactory immigration status.
(5) Nothing in subparagraph (A) or (B) of section
1902(a)(46), the preceding paragraphs of this subsection, or
the Deficit Reduction Act of 2005, including section 6036 of
such Act, shall be construed as changing the requirement of
section 1902(e)(4) that a child born in the United States to an
alien mother for whom medical assistance for the delivery of
such child is available as treatment of an emergency medical
condition pursuant to subsection (v) shall be deemed eligible
for medical assistance during the first year of such child's
life.
(y) Payments for Establishment of Alternate Non-Emergency
Services Providers.--
(1) Payments.--In addition to the payments otherwise
provided under subsection (a), subject to paragraph
(2), the Secretary shall provide for payments to States
under such subsection for the establishment of
alternate non-emergency service providers (as defined
in section 1916A(e)(5)(B)), or networks of such
providers.
(2) Limitation.--The total amount of payments under
this subsection shall not exceed $50,000,000 during the
4-year period beginning with 2006. This subsection
constitutes budget authority in advance of
appropriations Acts and represents the obligation of
the Secretary to provide for the payment of amounts
provided under this subsection.
(3) Preference.--In providing for payments to States
under this subsection, the Secretary shall provide
preference to States that establish, or provide for,
alternate non-emergency services providers or networks
of such providers that--
(A) serve rural or underserved areas where
beneficiaries under this title may not have
regular access to providers of primary care
services; or
(B) are in partnership with local community
hospitals.
(4) Form and manner of payment.--Payment to a State
under this subsection shall be made only upon the
filing of such application in such form and in such
manner as the Secretary shall specify. Payment to a
State under this subsection shall be made in the same
manner as other payments under section 1903(a).
(z) Medicaid Transformation Payments.--
(1) In general.--In addition to the payments provided
under subsection (a), subject to paragraph (4), the
Secretary shall provide for payments to States for the
adoption of innovative methods to improve the
effectiveness and efficiency in providing medical
assistance under this title.
(2) Permissible uses of funds.--The following are
examples of innovative methods for which funds provided
under this subsection may be used:
(A) Methods for reducing patient error rates
through the implementation and use of
electronic health records, electronic clinical
decision support tools, or e-prescribing
programs.
(B) Methods for improving rates of collection
from estates of amounts owed under this title.
(C) Methods for reducing waste, fraud, and
abuse under the program under this title, such
as reducing improper payment rates as measured
by annual payment error rate measurement (PERM)
project rates.
(D) Implementation of a medication risk
management program as part of a drug use review
program under section 1927(g).
(E) Methods in reducing, in clinically
appropriate ways, expenditures under this title
for covered outpatient drugs, particularly in
the categories of greatest drug utilization, by
increasing the utilization of generic drugs
through the use of education programs and other
incentives to promote greater use of generic
drugs.
(F) Methods for improving access to primary
and specialty physician care for the uninsured
using integrated university-based hospital and
clinic systems.
(3) Application; terms and conditions.--
(A) In general.--No payments shall be made to
a State under this subsection unless the State
applies to the Secretary for such payments in a
form, manner, and time specified by the
Secretary.
(B) Terms and conditions.--Such payments are
made under such terms and conditions consistent
with this subsection as the Secretary
prescribes.
(C) Annual report.--Payment to a State under
this subsection is conditioned on the State
submitting to the Secretary an annual report on
the programs supported by such payment. Such
report shall include information on--
(i) the specific uses of such
payment;
(ii) an assessment of quality
improvements and clinical outcomes
under such programs; and
(iii) estimates of cost savings
resulting from such programs.
(4) Funding.--
(A) Limitation on funds.--The total amount of
payments under this subsection shall be equal
to, and shall not exceed--
(i) $75,000,000 for fiscal year 2007;
and
(ii) $75,000,000 for fiscal year
2008.
This subsection constitutes budget authority in
advance of appropriations Acts and represents
the obligation of the Secretary to provide for
the payment of amounts provided under this
subsection.
(B) Allocation of funds.--The Secretary shall
specify a method for allocating the funds made
available under this subsection among States.
Such method shall provide preference for States
that design programs that target health
providers that treat significant numbers of
Medicaid beneficiaries. Such method shall
provide that not less than 25 percent of such
funds shall be allocated among States the
population of which (as determined according to
data collected by the United States Census
Bureau) as of July 1, 2004, was more than 105
percent of the population of the respective
State (as so determined) as of April 1, 2000.
(C) Form and manner of payment.--Payment to a
State under this subsection shall be made in
the same manner as other payments under section
1903(a). There is no requirement for State
matching funds to receive payments under this
subsection.
(5) Medication risk management program.--
(A) In general.--For purposes of this
subsection, the term ``medication risk
management program'' means a program for
targeted beneficiaries that ensures that
covered outpatient drugs are appropriately used
to optimize therapeutic outcomes through
improved medication use and to reduce the risk
of adverse events.
(B) Elements.--Such program may include the
following elements:
(i) The use of established principles
and standards for drug utilization
review and best practices to analyze
prescription drug claims of targeted
beneficiaries and identify outlier
physicians.
(ii) On an ongoing basis provide
outlier physicians--
(I) a comprehensive pharmacy
claims history for each
targeted beneficiary under
their care;
(II) information regarding
the frequency and cost of
relapses and hospitalizations
of targeted beneficiaries under
the physician's care; and
(III) applicable best
practice guidelines and
empirical references.
(iii) Monitor outlier physician's
prescribing, such as failure to refill,
dosage strengths, and provide
incentives and information to encourage
the adoption of best clinical
practices.
(C) Targeted beneficiaries.--For purposes of
this paragraph, the term ``targeted
beneficiaries'' means Medicaid eligible
beneficiaries who are identified as having high
prescription drug costs and medical costs, such
as individuals with behavioral disorders or
multiple chronic diseases who are taking
multiple medications.
* * * * * * *
DEFINITIONS
Sec. 1905. For purposes of this title--
(a) The term ``medical assistance'' means payment of part or
all of the cost of the following care and services or the care
and services themselves, or both (if provided in or after the
third month before the month in which the recipient makes
application for assistance or, in the case of medicare cost-
sharing with respect to a qualified medicare beneficiary
described in subsection (p)(1), if provided after the month in
which the individual becomes such a beneficiary) for
individuals, and, with respect to physicians' or dentists'
services, at the option of the State, to individuals (other
than individuals with respect to whom there is being paid, or
who are eligible, or would be eligible if they were not in a
medical institution, to have paid with respect to them a State
supplementary payment and are eligible for medical assistance
equal in amount, duration, and scope to the medical assistance
made available to individuals described in section
1902(a)(10)(A)) not receiving aid or assistance under any plan
of the State approved under title I, X, XIV, or XVI, or part A
of title IV, and with respect to whom supplemental security
income benefits are not being paid under title XVI, who are--
(i) under the age of 21, or, at the option of the
State, under the age of 20, 19, or 18 as the State may
choose,
(ii) relatives specified in section 406(b)(1) with
whom a child is living if such child is (or would, if
needy, be) a dependent child under part A of title IV,
(iii) 65 years of age or older,
(iv) blind, with respect to States eligible to
participate in the State plan program established under
title XVI,
(v) 18 years of age or older and permanently and
totally disabled, with respect to States eligible to
participate in the State plan program established under
title XVI,
(vi) persons essential (as described in the second
sentence of this subsection) to individuals receiving
aid or assistance under State plans approved under
title I, X, XIV, or XVI,
(vii) blind or disabled as defined in section 1614,
with respect to States not eligible to participate in
the State plan program established under title XVI,
(viii) pregnant women,
(ix) individuals provided extended benefits under
section 1925,
(x) individuals described in section 1902(u)(1),
(xi) individuals described in section 1902(z)(1),
(xii) employed individuals with a medically improved
disability (as defined in subsection (v)),
(xiii) individuals described in section 1902(aa),
(xiv) individuals described in section
1902(a)(10)(A)(i)(VIII) or 1902(a)(10)(A)(i)(IX),
(xv) individuals described in section
1902(a)(10)(A)(ii)(XX),
(xvi) individuals described in
section 1902(ii), or
(xvii) individuals who are eligible for home and
community-based services under needs-based criteria
established under paragraph (1)(A) of section 1915(i),
or who are eligible for home and community-based
services under paragraph (6) of such section, and who
will receive home and community-based services pursuant
to a State plan amendment under such subsection,
but whose income and resources are insufficient to meet all of
such cost--
(1) inpatient hospital services (other than services
in an institution for mental diseases);
(2)(A) outpatient hospital services, (B) consistent
with State law permitting such services, rural health
clinic services (as defined in subsection (l)(1)) and
any other ambulatory services which are offered by a
rural health clinic (as defined in subsection (l)(1))
and which are otherwise included in the plan, and (C)
Federally-qualified health center services (as defined
in subsection (l)(2)) and any other ambulatory services
offered by a Federally-qualified health center and
which are otherwise included in the plan;
(3) other laboratory and X-ray services;
(4)(A) nursing facility services (other than services
in an institution for mental diseases) for individuals
21 years of age or older; (B) early and periodic
screening, diagnostic, and treatment services (as
defined in subsection (r)) for individuals who are
eligible under the plan and are under the age of 21;
(C) family planning services and supplies furnished
(directly or under arrangements with others) to
individuals of child-bearing age (including minors who
can be considered to be sexually active) who are
eligible under the State plan and who desire such
services and supplies; and (D) counseling and
pharmacotherapy for cessation of tobacco use by
pregnant women (as defined in subsection (bb));
(5)(A) physicians' services furnished by a physician
(as defined in section 1861(r)(1)), whether furnished
in the office, the patient's home, a hospital, or a
nursing facility, or elsewhere, and (B) medical and
surgical services furnished by a dentist (described in
section 1861(r)(2)) to the extent such services may be
performed under State law either by a doctor of
medicine or by a doctor of dental surgery or dental
medicine and would be described in clause (A) if
furnished by a physician (as defined in section
1861(r)(1));
(6) medical care, or any other type of remedial care
recognized under State law, furnished by licensed
practitioners within the scope of their practice as
defined by State law;
(7) home health care services;
(8) private duty nursing services;
(9) clinic services furnished by or under the
direction of a physician, without regard to whether the
clinic itself is administered by a physician, including
such services furnished outside the clinic by clinic
personnel to an eligible individual who does not reside
in a permanent dwelling or does not have a fixed home
or mailing address;
(10) dental services;
(11) physical therapy and related services;
(12) prescribed drugs, dentures, and prosthetic
devices; and eyeglasses prescribed by a physician
skilled in diseases of the eye or by an optometrist,
whichever the individual may select;
(13) other diagnostic, screening, preventive, and
rehabilitative services, including--
(A) any clinical preventive services that are
assigned a grade of A or B by the United States
Preventive Services Task Force;
(B) with respect to an adult individual,
approved vaccines recommended by the Advisory
Committee on Immunization Practices (an
advisory committee established by the
Secretary, acting through the Director of the
Centers for Disease Control and Prevention) and
their administration; and
(C) any medical or remedial services
(provided in a facility, a home, or other
setting) recommended by a physician or other
licensed practitioner of the healing arts
within the scope of their practice under State
law, for the maximum reduction of physical or
mental disability and restoration of an
individual to the best possible functional
level;
(14) inpatient hospital services and nursing facility
services for individuals 65 years of age or over in an
institution for mental diseases;
(15) services in an intermediate care facility for
the mentally retarded (other than in an institution for
mental diseases) for individuals who are determined, in
accordance with section 1902(a)(31), to be in need of
such care;
(16) effective January 1, 1973, inpatient psychiatric
hospital services for individuals under age 21, as
defined in subsection (h);
(17) services furnished by a nurse-midwife (as
defined in section 1861(gg)) which the nurse-midwife is
legally authorized to perform under State law (or the
State regulatory mechanism provided by State law),
whether or not the nurse-midwife is under the
supervision of, or associated with, a physician or
other health care provider, and without regard to
whether or not the services are performed in the area
of management of the care of mothers and babies
throughout the maternity cycle;
(18) hospice care (as defined in subsection (o));
(19) case management services (as defined in section
1915(g)(2)) and TB-related services described in
section 1902(z)(2)(F);
(20) respiratory care services (as defined in section
1902(e)(9)(C));
(21) services furnished by a certified pediatric
nurse practitioner or certified family nurse
practitioner (as defined by the Secretary) which the
certified pediatric nurse practitioner or certified
family nurse practitioner is legally authorized to
perform under State law (or the State regulatory
mechanism provided by State law), whether or not the
certified pediatric nurse practitioner or certified
family nurse practitioner is under the supervision of,
or associated with, a physician or other health care
provider;
(22) home and community care (to the extent allowed
and as defined in section 1929) for functionally
disabled elderly individuals;
(23) community supported living arrangements services
(to the extent allowed and as defined in section 1930);
(24) personal care services furnished to an
individual who is not an inpatient or resident of a
hospital, nursing facility, intermediate care facility
for the mentally retarded, or institution for mental
disease that are (A) authorized for the individual by a
physician in accordance with a plan of treatment or (at
the option of the State) otherwise authorized for the
individual in accordance with a service plan approved
by the State, (B) provided by an individual who is
qualified to provide such services and who is not a
member of the individual's family, and (C) furnished in
a home or other location;
(25) primary care case management services (as
defined in subsection (t));
(26) services furnished under a PACE program under
section 1934 to PACE program eligible individuals
enrolled under the program under such section;
(27) subject to subsection (x), primary and secondary
medical strategies and treatment and services for
individuals who have Sickle Cell Disease;
(28) freestanding birth center services (as defined
in subsection (l)(3)(A)) and other ambulatory services
that are offered by a freestanding birth center (as
defined in subsection (l)(3)(B)) and that are otherwise
included in the plan; and
(29) any other medical care, and any other type of
remedial care recognized under State law, specified by
the Secretary,
except as otherwise provided in paragraph (16), such term does
not include--
(A) any such payments with respect to care or
services for any individual who is an inmate of a
public institution (except as a patient in a medical
institution); or
(B) any such payments with respect to care or
services for any individual who has not attained 65
years of age and who is a patient in an institution for
mental diseases.
For purposes of clause (vi) of the preceding sentence, a person
shall be considered essential to another individual if such
person is the spouse of and is living with such individual, the
needs of such person are taken into account in determining the
amount of aid or assistance furnished to such individual (under
a State plan approved under title I, X, XIV, or XVI), and such
person is determined, under such a State plan, to be essential
to the well-being of such individual. The payment described in
the first sentence may include expenditures for medicare cost-
sharing and for premiums under part B of title XVIII for
individuals who are eligible for medical assistance under the
plan and (A) are receiving aid or assistance under any plan of
the State approved under title I, X, XIV, or XVI, or part A of
title IV, or with respect to whom supplemental security income
benefits are being paid under title XVI, or (B) with respect to
whom there is being paid a State supplementary payment and are
eligible for medical assistance equal in amount, duration, and
scope to the medical assistance made available to individuals
described in section 1902(a)(10)(A), and, except in the case of
individuals 65 years of age or older and disabled individuals
entitled to health insurance benefits under title XVIII who are
not enrolled under part B of title XVIII, other insurance
premiums for medical or any other type of remedial care or the
cost thereof. No service (including counseling) shall be
excluded from the definition of ``medical assistance'' solely
because it is provided as a treatment service for alcoholism or
drug dependency.
(b) Subject to subsections (y), (z), and (aa) and section
1933(d), the term ``Federal medical assistance percentage'' for
any State shall be 100 per centum less the State percentage;
and the State percentage shall be that percentage which bears
the same ratio to 45 per centum as the square of the per capita
income of such State bears to the square of the per capita
income of the continental United States (including Alaska) and
Hawaii; except that (1) the Federal medical assistance
percentage shall in no case be less than 50 per centum or more
than 83 per centum, (2) the Federal medical assistance
percentage for Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa shall be 55
percent, (3) for purposes of this title and title XXI, the
Federal medical assistance percentage for the District of
Columbia shall be 70 percent, (4) the Federal medical
assistance percentage shall be equal to the enhanced FMAP
described in section 2105(b) with respect to medical assistance
provided to individuals who are eligible for such assistance
only on the basis of section 1902(a)(10)(A)(ii)(XVIII), and (5)
in the case of a State that provides medical assistance for
services and vaccines described in subparagraphs (A) and (B) of
subsection (a)(13), and prohibits cost-sharing for such
services and vaccines, the Federal medical assistance
percentage, as determined under this subsection and subsection
(y) (without regard to paragraph (1)(C) of such subsection),
shall be increased by 1 percentage point with respect to
medical assistance for such services and vaccines and for items
and services described in subsection (a)(4)(D). The Federal
medical assistance percentage for any State shall be determined
and promulgated in accordance with the provisions of section
1101(a)(8)(B). Notwithstanding the first sentence of this
section, the Federal medical assistance percentage shall be 100
per centum with respect to amounts expended as medical
assistance for services which are received through an Indian
Health Service facility whether operated by the Indian Health
Service or by an Indian tribe or tribal organization (as
defined in section 4 of the Indian Health Care Improvement
Act). Notwithstanding the first sentence of this subsection, in
the case of a State plan that meets the condition described in
subsection (u)(1), with respect to expenditures (other than
expenditures under section 1923) described in subsection
(u)(2)(A) or subsection (u)(3) for the State for a fiscal year,
and that do not exceed the amount of the State's available
allotment under section 2104, the Federal medical assistance
percentage is equal to the enhanced FMAP described in section
2105(b).
(c) For definition of the term ``nursing facility'', see
section 1919(a).
(d) The term ``intermediate care facility for the mentally
retarded'' means an institution (or distinct part thereof) for
the mentally retarded or persons with related conditions if--
(1) the primary purpose of such institution (or
distinct part thereof) is to provide health or
rehabilitative services for mentally retarded
individuals and the institution meets such standards as
may be prescribed by the Secretary;
(2) the mentally retarded individual with respect to
whom a request for payment is made under a plan
approved under this title is receiving active treatment
under such a program; and
(3) in the case of a public institution, the State or
political subdivision responsible for the operation of
such institution has agreed that the non-Federal
expenditures in any calendar quarter prior to January
1, 1975, with respect to services furnished to patients
in such institution (or distinct part thereof) in the
State will not, because of payments made under this
title, be reduced below the average amount expended for
such services in such institution in the four quarters
immediately preceding the quarter in which the State in
which such institution is located elected to make such
services available under its plan approved under this
title.
(e) In the case of any State the State plan of which (as
approved under this title)--
(1) does not provide for the payment of services
(other than services covered under section 1902(a)(12))
provided by an optometrist; but
(2) at a prior period did provide for the payment of
services referred to in paragraph (1);
the term ``physicians' services'' (as used in subsection
(a)(5)) shall include services of the type which an optometrist
is legally authorized to perform where the State plan
specifically provides that the term ``physicians' services'',
as employed in such plan, includes services of the type which
an optometrist is legally authorized to perform, and shall be
reimbursed whether furnished by a physician or an optometrist.
(f) For purposes of this title, the term ``nursing facility
services'' means services which are or were required to be
given an individual who needs or needed on a daily basis
nursing care (provided directly by or requiring the supervision
of nursing personnel) or other rehabilitation services which as
a practical matter can only be provided in a nursing facility
on an inpatient basis.
(g) If the State plan includes provision of chiropractors'
services, such services include only--
(1) services provided by a chiropractor (A) who is
licensed as such by the State and (B) who meets uniform
minimum standards promulgated by the Secretary under
section 1861(r)(5); and
(2) services which consist of treatment by means of
manual manipulation of the spine which the chiropractor
is legally authorized to perform by the State.
(h)(1) For purposes of paragraph (16) of subsection (a), the
term ``inpatient psychiatric hospital services for individuals
under age 21'' includes only--
(A) inpatient services which are provided in an
institution (or distinct part thereof) which is a
psychiatric hospital as defined in section 1861(f) or
in another inpatient setting that the Secretary has
specified in regulations;
(B) inpatient services which, in the case of any
individual (i) involve active treatment which meets
such standards as may be prescribed in regulations by
the Secretary, and (ii) a team, consisting of
physicians and other personnel qualified to make
determinations with respect to mental health conditions
and the treatment thereof, has determined are necessary
on an inpatient basis and can reasonably be expected to
improve the condition, by reason of which such services
are necessary, to the extent that eventually such
services will no longer be necessary; and
(C) inpatient services which, in the case of any
individual, are provided prior to (i) the date such
individual attains age 21, or (ii) in the case of an
individual who was receiving such services in the
period immediately preceding the date on which he
attained age 21, (I) the date such individual no longer
requires such services, or (II) if earlier, the date
such individual attains age 22;
(2) Such term does not include services provided during any
calendar quarter under the State plan of any State if the total
amount of the funds expended, during such quarter, by the State
(and the political subdivisions thereof) from non-Federal funds
for inpatient services included under paragraph (1), and for
active psychiatric care and treatment provided on an outpatient
basis for eligible mentally ill children, is less than the
average quarterly amount of the funds expended, during the 4-
quarter period ending December 31, 1971, by the State (and the
political subdivisions thereof) from non-Federal funds for such
services.
(i) The term ``institution for mental diseases'' means a
hospital, nursing facility, or other institution of more than
16 beds, that is primarily engaged in providing diagnosis,
treatment, or care of persons with mental diseases, including
medical attention, nursing care, and related services.
(j) The term ``State supplementary payment'' means any cash
payment made by a State on a regular basis to an individual who
is receiving supplemental security income benefits under title
XVI or who would but for his income be eligible to receive such
benefits, as assistance based on need in supplementation of
such benefits (as determined by the Commissioner of Social
Security), but only to the extent that such payments are made
with respect to an individual with respect to whom supplemental
security income benefits are payable under title XVI, or would
but for his income be payable under that title.
(k) Increased supplemental security income benefits payable
pursuant to section 211 of Public Law 93-66 shall not be
considered supplemental security income benefits payable under
title XVI.
(l)(1) The terms ``rural health clinic services'' and ``rural
health clinic'' have the meanings given such terms in section
1861(aa), except that (A) clause (ii) of section 1861(aa)(2)
shall not apply to such terms, and (B) the physician
arrangement required under section 1861(aa)(2)(B) shall only
apply with respect to rural health clinic services and, with
respect to other ambulatory care services, the physician
arrangement required shall be only such as may be required
under the State plan for those services.
(2)(A) The term ``Federally-qualified health center
services'' means services of the type described in
subparagraphs (A) through (C) of section 1861(aa)(1) when
furnished to an individual as an patient of a Federally-
qualified health center and, for this purpose, any reference to
a rural health clinic or a physician described in section
1861(aa)(2)(B) is deemed a reference to a Federally-qualified
health center or a physician at the center, respectively.
(B) The term ``Federally-qualified health center'' means an
entity which--
(i) is receiving a grant under section 330 of the
Public Health Service Act,
(ii)(I) is receiving funding from such a grant under
a contract with the recipient of such a grant, and
(II) meets the requirements to receive a grant under
section 330 of such Act,
(iii) based on the recommendation of the Health
Resources and Services Administration within the Public
Health Service, is determined by the Secretary to meet
the requirements for receiving such a grant, including
requirements of the Secretary that an entity may not be
owned, controlled, or operated by another entity, or
(iv) was treated by the Secretary, for purposes of
part B of title XVIII, as a comprehensive Federally
funded health center as of January 1, 1990;
and includes an outpatient health program or facility operated
by a tribe or tribal organization under the Indian Self-
Determination Act (Public Law 93-638) or by an urban Indian
organization receiving funds under title V of the Indian Health
Care Improvement Act for the provision of primary health
services. In applying clause (ii), the Secretary may waive any
requirement referred to in such clause for up to 2 years for
good cause shown.
(3)(A) The term ``freestanding birth center services'' means
services furnished to an individual at a freestanding birth
center (as defined in subparagraph (B)) at such center.
(B) The term ``freestanding birth center'' means a health
facility--
(i) that is not a hospital;
(ii) where childbirth is planned to occur away from
the pregnant woman's residence;
(iii) that is licensed or otherwise approved by the
State to provide prenatal labor and delivery or
postpartum care and other ambulatory services that are
included in the plan; and
(iv) that complies with such other requirements
relating to the health and safety of individuals
furnished services by the facility as the State shall
establish.
(C) A State shall provide separate payments to providers
administering prenatal labor and delivery or postpartum care in
a freestanding birth center (as defined in subparagraph (B)),
such as nurse midwives and other providers of services such as
birth attendants recognized under State law, as determined
appropriate by the Secretary. For purposes of the preceding
sentence, the term ``birth attendant'' means an individual who
is recognized or registered by the State involved to provide
health care at childbirth and who provides such care within the
scope of practice under which the individual is legally
authorized to perform such care under State law (or the State
regulatory mechanism provided by State law), regardless of
whether the individual is under the supervision of, or
associated with, a physician or other health care provider.
Nothing in this subparagraph shall be construed as changing
State law requirements applicable to a birth attendant.
(m)(1) Subject to paragraph (2), the term ``qualified family
member'' means an individual (other than a qualified pregnant
woman or child, as defined in subsection (n)) who is a member
of a family that would be receiving aid under the State plan
under part A of title IV pursuant to section 407 if the State
had not exercised the option under section 407(b)(2)(B)(i).
(2) No individual shall be a qualified family member for any
period after September 30, 1998.
(n) The term ``qualified pregnant woman or child'' means--
(1) a pregnant woman who--
(A) would be eligible for aid to families
with dependent children under part A of title
IV (or would be eligible for such aid if
coverage under the State plan under part A of
title IV included aid to families with
dependent children of unemployed parents
pursuant to section 407) if her child had been
born and was living with her in the month such
aid would be paid, and such pregnancy has been
medically verified;
(B) is a member of a family which would be
eligible for aid under the State plan under
part A of title IV pursuant to section 407 if
the plan required the payment of aid pursuant
to such section; or
(C) otherwise meets the income and resources
requirements of a State plan under part A of
title IV; and
(2) a child who has not attained the age of 19, who
was born after September 30, 1983 (or such earlier date
as the State may designate), and who meets the income
and resources requirements of the State plan under part
A of title IV.
(o)(1)(A) Subject to subparagraphs (B) and (C), the term
``hospice care'' means the care described in section
1861(dd)(1) furnished by a hospice program (as defined in
section 1861(dd)(2)) to a terminally ill individual who has
voluntarily elected (in accordance with paragraph (2)) to have
payment made for hospice care instead of having payment made
for certain benefits described in section 1812(d)(2)(A) and for
which payment may otherwise be made under title XVIII and
intermediate care facility services under the plan. For
purposes of such election, hospice care may be provided to an
individual while such individual is a resident of a skilled
nursing facility or intermediate care facility, but the only
payment made under the State plan shall be for the hospice
care.
(B) For purposes of this title, with respect to the
definition of hospice program under section 1861(dd)(2), the
Secretary may allow an agency or organization to make the
assurance under subparagraph (A)(iii) of such section without
taking into account any individual who is afflicted with
acquired immune deficiency syndrome (AIDS).
(C) A voluntary election to have payment made for hospice
care for a child (as defined by the State) shall not constitute
a waiver of any rights of the child to be provided with, or to
have payment made under this title for, services that are
related to the treatment of the child's condition for which a
diagnosis of terminal illness has been made.
(2) An individual's voluntary election under this subsection
--
(A) shall be made in accordance with procedures that
are established by the State and that are consistent
with the procedures established under section
1812(d)(2);
(B) shall be for such a period or periods (which need
not be the same periods described in section
1812(d)(1)) as the State may establish; and
(C) may be revoked at any time without a showing of
cause and may be modified so as to change the hospice
program with respect to which a previous election was
made.
(3) In the case of an individual--
(A) who is residing in a nursing facility or
intermediate care facility for the mentally retarded
and is receiving medical assistance for services in
such facility under the plan,
(B) who is entitled to benefits under part A of title
XVIII and has elected, under section 1812(d), to
receive hospice care under such part, and
(C) with respect to whom the hospice program under
such title and the nursing facility or intermediate
care facility for the mentally retarded have entered
into a written agreement under which the program takes
full responsibility for the professional management of
the individual's hospice care and the facility agrees
to provide room and board to the individual,
instead of any payment otherwise made under the plan with
respect to the facility's services, the State shall provide for
payment to the hospice program of an amount equal to the
additional amount determined in section 1902(a)(13)(B) and, if
the individual is an individual described in section
1902(a)(10)(A), shall provide for payment of any coinsurance
amounts imposed under section 1813(a)(4).
(p)(1) The term ``qualified medicare beneficiary'' means an
individual--
(A) who is entitled to hospital insurance benefits
under part A of title XVIII (including an individual
entitled to such benefits pursuant to an enrollment
under section 1818, but not including an individual
entitled to such benefits only pursuant to an
enrollment under section 1818A),
(B) whose income (as determined under section 1612
for purposes of the supplemental security income
program, except as provided in paragraph (2)(D)) does
not exceed an income level established by the State
consistent with paragraph (2), and
(C) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual may have and obtain
benefits under that program or, effective beginning
with January 1, 2010, whose resources (as so
determined) do not exceed the maximum resource level
applied for the year under subparagraph (D) of section
1860D-14(a)(3) (determined without regard to the life
insurance policy exclusion provided under subparagraph
(G) of such section) applicable to an individual or to
the individual and the individual's spouse (as the case
may be).
(2)(A) The income level established under paragraph (1)(B)
shall be at least the percent provided under subparagraph (B)
(but not more than 100 percent) of the official poverty line
(as defined by the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family of
the size involved.
(B) Except as provided in subparagraph (C), the percent
provided under this clause, with respect to eligibility for
medical assistance on or after--
(i) January 1, 1989, is 85 percent,
(ii) January 1, 1990, is 90 percent, and
(iii) January 1, 1991, is 100 percent.
(C) In the case of a State which has elected treatment under
section 1902(f) and which, as of January 1, 1987, used an
income standard for individuals age 65 or older which was more
restrictive than the income standard established under the
supplemental security income program under title XVI, the
percent provided under subparagraph (B), with respect to
eligibility for medical assistance on or after--
(i) January 1, 1989, is 80 percent,
(ii) January 1, 1990, is 85 percent,
(iii) January 1, 1991, is 95 percent, and
(iv) January 1, 1992, is 100 percent.
(D)(i) In determining under this subsection the income of an
individual who is entitled to monthly insurance benefits under
title II for a transition month (as defined in clause (ii)) in
a year, such income shall not include any amounts attributable
to an increase in the level of monthly insurance benefits
payable under such title which have occurred pursuant to
section 215(i) for benefits payable for months beginning with
December of the previous year.
(ii) For purposes of clause (i), the term ``transition
month'' means each month in a year through the month following
the month in which the annual revision of the official poverty
line, referred to in subparagraph (A), is published.
(3) The term ``medicare cost-sharing'' means (subject to
section 1902(n)(2)) the following costs incurred with respect
to a qualified medicare beneficiary, without regard to whether
the costs incurred were for items and services for which
medical assistance is otherwise available under the plan:
(A)(i) premiums under section 1818 or 1818A, and
(ii) premiums under section 1839,
(B) Coinsurance under title XVIII (including
coinsurance described in section 1813).
(C) Deductibles established under title XVIII
(including those described in section 1813 and section
1833(b)).
(D) The difference between the amount that is paid
under section 1833(a) and the amount that would be paid
under such section if any reference to ``80 percent''
therein were deemed a reference to ``100 percent''.
Such term also may include, at the option of a State, premiums
for enrollment of a qualified medicare beneficiary with an
eligible organization under section 1876.
(4) Notwithstanding any other provision of this title, in the
case of a State (other than the 50 States and the District of
Columbia)--
(A) the requirement stated in section 1902(a)(10)(E)
shall be optional, and
(B) for purposes of paragraph (2), the State may
substitute for the percent provided under subparagraph
(B) of such paragraph or 1902(a)(10)(E)(iii) any
percent.
In the case of any State which is providing medical assistance
to its residents under a waiver granted under section 1115, the
Secretary shall require the State to meet the requirement of
section 1902(a)(10)(E) in the same manner as the State would be
required to meet such requirement if the State had in effect a
plan approved under this title.
(5)(A) The Secretary shall develop and distribute to States a
simplified application form for use by individuals (including
both qualified medicare beneficiaries and specified low-income
medicare beneficiaries) in applying for medical assistance for
medicare cost-sharing under this title in the States which
elect to use such form. Such form shall be easily readable by
applicants and uniform nationally. The Secretary shall provide
for the translation of such application form into at least the
10 languages (other than English) that are most often used by
individuals applying for hospital insurance benefits under
section 226 or 226A and shall make the translated forms
available to the States and to the Commissioner of Social
Security.
(B) In developing such form, the Secretary shall consult with
beneficiary groups and the States.
(6) For provisions relating to outreach efforts to increase
awareness of the availability of medicare cost-sharing, see
section 1144.
(q) The term ``qualified severely impaired individual'' means
an individual under age 65--
(1) who for the month preceding the first month to
which this subsection applies to such individual--
(A) received (i) a payment of supplemental
security income benefits under section 1611(b)
on the basis of blindness or disability, (ii) a
supplementary payment under section 1616 of
this Act or under section 212 of Public Law 93-
66 on such basis, (iii) a payment of monthly
benefits under section 1619(a), or (iv) a
supplementary payment under section 1616(c)(3),
and
(B) was eligible for medical assistance under
the State plan approved under this title; and
(2) with respect to whom the Commissioner of Social
Security determines that--
(A) the individual continues to be blind or
continues to have the disabling physical or
mental impairment on the basis of which he was
found to be under a disability and, except for
his earnings, continues to meet all non-
disability-related requirements for eligibility
for benefits under title XVI,
(B) the income of such individual would not,
except for his earnings, be equal to or in
excess of the amount which would cause him to
be ineligible for payments under section
1611(b) (if he were otherwise eligible for such
payments),
(C) the lack of eligibility for benefits
under this title would seriously inhibit his
ability to continue or obtain employment, and
(D) the individual's earnings are not
sufficient to allow him to provide for himself
a reasonable equivalent of the benefits under
title XVI (including any federally administered
State supplementary payments), this title, and
publicly funded attendant care services
(including personal care assistance) that would
be available to him in the absence of such
earnings.
In the case of an individual who is eligible for
medical assistance pursuant to section 1619(b) in June,
1987, the individual shall be a qualified severely
impaired individual for so long as such individual
meets the requirements of paragraph (2).
(r) The term ``early and periodic screening, diagnostic, and
treatment services'' means the following items and services:
(1) Screening services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical and
dental practice, as determined by the
State after consultation with
recognized medical and dental
organizations involved in child health
care and, with respect to immunizations
under subparagraph (B)(iii), in
accordance with the schedule referred
to in section 1928(c)(2)(B)(i) for
pediatric vaccines, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of certain
physical or mental illnesses or
conditions; and
(B) which shall at a minimum include--
(i) a comprehensive health and
developmental history (including
assessment of both physical and mental
health development),
(ii) a comprehensive unclothed
physical exam,
(iii) appropriate immunizations
(according to the schedule referred to
in section 1928(c)(2)(B)(i) for
pediatric vaccines) according to age
and health history,
(iv) laboratory tests (including lead
blood level assessment appropriate for
age and risk factors), and
(v) health education (including
anticipatory guidance).
(2) Vision services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical
practice, as determined by the State
after consultation with recognized
medical organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include
diagnosis and treatment for defects in vision,
including eyeglasses.
(3) Dental services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of dental
practice, as determined by the State
after consultation with recognized
dental organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include relief
of pain and infections, restoration of teeth,
and maintenance of dental health.
(4) Hearing services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical
practice, as determined by the State
after consultation with recognized
medical organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include
diagnosis and treatment for defects in hearing,
including hearing aids.
(5) Such other necessary health care, diagnostic
services, treatment, and other measures described in
section 1905(a) to correct or ameliorate defects and
physical and mental illnesses and conditions discovered
by the screening services, whether or not such services
are covered under the State plan.
Nothing in this title shall be construed as limiting providers
of early and periodic screening, diagnostic, and treatment
services to providers who are qualified to provide all of the
items and services described in the previous sentence or as
preventing a provider that is qualified under the plan to
furnish one or more (but not all) of such items or services
from being qualified to provide such items and services as part
of early and periodic screening, diagnostic, and treatment
services. The Secretary shall, not later than July 1, 1990, and
every 12 months thereafter, develop and set annual
participation goals for each State for participation of
individuals who are covered under the State plan under this
title in early and periodic screening, diagnostic, and
treatment services.
(s) The term ``qualified disabled and working individual''
means an individual--
(1) who is entitled to enroll for hospital insurance
benefits under part A of title XVIII under section
1818A (as added by 6012 of the Omnibus Budget
Reconciliation Act of 1989);
(2) whose income (as determined under section 1612
for purposes of the supplemental security income
program) does not exceed 200 percent of the official
poverty line (as defined by the Office of Management
and Budget and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act
of 1981) applicable to a family of the size involved;
(3) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual or a couple (in the case
of an individual with a spouse) may have and obtain
benefits for supplemental security income benefits
under title XVI; and
(4) who is not otherwise eligible for medical
assistance under this title.
(t)(1) The term ``primary care case management services''
means case-management related services (including locating,
coordinating, and monitoring of health care services) provided
by a primary care case manager under a primary care case
management contract.
(2) The term ``primary care case manager'' means any of the
following that provides services of the type described in
paragraph (1) under a contract referred to in such paragraph:
(A) A physician, a physician group practice, or an
entity employing or having other arrangements with
physicians to provide such services.
(B) At State option--
(i) a nurse practitioner (as described in
section 1905(a)(21));
(ii) a certified nurse-midwife (as defined in
section 1861(gg)); or
(iii) a physician assistant (as defined in
section 1861(aa)(5)).
(3) The term ``primary care case management contract'' means
a contract between a primary care case manager and a State
under which the manager undertakes to locate, coordinate, and
monitor covered primary care (and such other covered services
as may be specified under the contract) to all individuals
enrolled with the manager, and which--
(A) provides for reasonable and adequate hours of
operation, including 24-hour availability of
information, referral, and treatment with respect to
medical emergencies;
(B) restricts enrollment to individuals residing
sufficiently near a service delivery site of the
manager to be able to reach that site within a
reasonable time using available and affordable modes of
transportation;
(C) provides for arrangements with, or referrals to,
sufficient numbers of physicians and other appropriate
health care professionals to ensure that services under
the contract can be furnished to enrollees promptly and
without compromise to quality of care;
(D) prohibits discrimination on the basis of health
status or requirements for health care services in
enrollment, disenrollment, or reenrollment of
individuals eligible for medical assistance under this
title;
(E) provides for a right for an enrollee to terminate
enrollment in accordance with section 1932(a)(4); and
(F) complies with the other applicable provisions of
section 1932.
(4) For purposes of this subsection, the term ``primary
care'' includes all health care services customarily provided
in accordance with State licensure and certification laws and
regulations, and all laboratory services customarily provided
by or through, a general practitioner, family medicine
physician, internal medicine physician, obstetrician/
gynecologist, or pediatrician.
(u)(1) The conditions described in this paragraph for a State
plan are as follows:
(A) The State is complying with the requirement of
section 2105(d)(1).
(B) The plan provides for such reporting of
information about expenditures and payments
attributable to the operation of this subsection as the
Secretary deems necessary in order to carry out the
fourth sentence of subsection (b).
(2)(A) For purposes of subsection (b), the expenditures
described in this subparagraph are expenditures for medical
assistance for optional targeted low-income children described
in subparagraph (B).
(B) For purposes of this paragraph, the term ``optional
targeted low-income child'' means a targeted low-income child
as defined in section 2110(b)(1) (determined without regard to
that portion of subparagraph (C) of such section concerning
eligibility for medical assistance under this title) who would
not qualify for medical assistance under the State plan under
this title as in effect on March 31, 1997 (but taking into
account the expansion of age of eligibility effected through
the operation of section 1902(l)(1)(D)). Such term excludes any
child eligible for medical assistance only by reason of section
1902(a)(10)(A)(ii)(XIX).
(3) For purposes of subsection (b), the expenditures
described in this paragraph are expenditures for medical
assistance for children who are born before October 1, 1983,
and who would be described in section 1902(l)(1)(D) if they had
been born on or after such date, and who are not eligible for
such assistance under the State plan under this title based on
such State plan as in effect as of March 31, 1997.
(4) The limitations on payment under subsections (f) and (g)
of section 1108 shall not apply to Federal payments made under
section 1903(a)(1) based on an enhanced FMAP described in
section 2105(b).
(v)(1) The term ``employed individual with a medically
improved disability'' means an individual who--
(A) is at least 16, but less than 65, years of age;
(B) is employed (as defined in paragraph (2));
(C) ceases to be eligible for medical assistance
under section 1902(a)(10)(A)(ii)(XV) because the
individual, by reason of medical improvement, is
determined at the time of a regularly scheduled
continuing disability review to no longer be eligible
for benefits under section 223(d) or 1614(a)(3); and
(D) continues to have a severe medically determinable
impairment, as determined under regulations of the
Secretary.
(2) For purposes of paragraph (1), an individual is
considered to be ``employed'' if the individual--
(A) is earning at least the applicable minimum wage
requirement under section 6 of the Fair Labor Standards
Act (29 U.S.C. 206) and working at least 40 hours per
month; or
(B) is engaged in a work effort that meets
substantial and reasonable threshold criteria for hours
of work, wages, or other measures, as defined by the
State and approved by the Secretary.'
(w)(1) For purposes of this title, the term ``independent
foster care adolescent'' means an individual--
(A) who is under 21 years of age;
(B) who, on the individual's 18th birthday, was in
foster care under the responsibility of a State; and
(C) whose assets, resources, and income do not exceed
such levels (if any) as the State may establish
consistent with paragraph (2).
(2) The levels established by a State under paragraph (1)(C)
may not be less than the corresponding levels applied by the
State under section 1931(b).
(3) A State may limit the eligibility of independent foster
care adolescents under section 1902(a)(10)(A)(ii)(XVII) to
those individuals with respect to whom foster care maintenance
payments or independent living services were furnished under a
program funded under part E of title IV before the date the
individuals attained 18 years of age.
(x) For purposes of subsection (a)(27), the strategies,
treatment, and services described in that subsection include
the following:
(1) Chronic blood transfusion (with deferoxamine
chelation) to prevent stroke in individuals with Sickle
Cell Disease who have been identified as being at high
risk for stroke.
(2) Genetic counseling and testing for individuals
with Sickle Cell Disease or the sickle cell trait to
allow health care professionals to treat such
individuals and to prevent symptoms of Sickle Cell
Disease.
(3) Other treatment and services to prevent
individuals who have Sickle Cell Disease and who have
had a stroke from having another stroke.
(y) Increased FMAP for Medical Assistance for Newly Eligible
Mandatory Individuals.--
(1) Amount of increase.--Notwithstanding subsection
(b), the Federal medical assistance percentage for a
State that is one of the 50 States or the District of
Columbia, with respect to amounts expended by such
State for medical assistance for newly eligible
individuals described in subclause (VIII) of section
1902(a)(10)(A)(i), shall be equal to--
(A) 100 percent for calendar quarters in
2014, 2015, and 2016;
(B) 95 percent for calendar quarters in 2017;
(C) 94 percent for calendar quarters in 2018;
(D) 93 percent for calendar quarters in 2019;
and
(E) 90 percent for calendar quarters in 2020
and each year thereafter.
(2) Definitions.--In this subsection:
(A) Newly eligible.--The term ``newly
eligible'' means, with respect to an individual
described in subclause (VIII) of section
1902(a)(10)(A)(i), an individual who is not
under 19 years of age (or such higher age as
the State may have elected) and who, as of
December 1, 2009, is not eligible under the
State plan or under a waiver of the plan for
full benefits or for benchmark coverage
described in subparagraph (A), (B), or (C) of
section 1937(b)(1) or benchmark equivalent
coverage described in section 1937(b)(2) that
has an aggregate actuarial value that is at
least actuarially equivalent to benchmark
coverage described in subparagraph (A), (B), or
(C) of section 1937(b)(1), or is eligible but
not enrolled (or is on a waiting list) for such
benefits or coverage through a waiver under the
plan that has a capped or limited enrollment
that is full.
(B) Full benefits.--The term ``full
benefits'' means, with respect to an
individual, medical assistance for all services
covered under the State plan under this title
that is not less in amount, duration, or scope,
or is determined by the Secretary to be
substantially equivalent, to the medical
assistance available for an individual
described in section 1902(a)(10)(A)(i).
(z) Equitable Support for Certain States.--
(1)(A) During the period that begins on January 1,
2014, and ends on December 31, 2015, notwithstanding
subsection (b), the Federal medical assistance
percentage otherwise determined under subsection (b)
with respect to a fiscal year occurring during that
period shall be increased by 2.2 percentage points for
any State described in subparagraph (B) for amounts
expended for medical assistance for individuals who are
not newly eligible (as defined in subsection (y)(2))
individuals described in subclause (VIII) of section
1902(a)(10)(A)(i).
(B) For purposes of subparagraph (A), a State
described in this subparagraph is a State that--
(i) is an expansion State described in
paragraph (3);
(ii) the Secretary determines will not
receive any payments under this title on the
basis of an increased Federal medical
assistance percentage under subsection (y) for
expenditures for medical assistance for newly
eligible individuals (as so defined); and
(iii) has not been approved by the Secretary
to divert a portion of the DSH allotment for a
State to the costs of providing medical
assistance or other health benefits coverage
under a waiver that is in effect on July 2009.
(2)(A) For calendar quarters in 2014 and each year
thereafter, the Federal medical assistance percentage
otherwise determined under subsection (b) for an
expansion State described in paragraph (3) with respect
to medical assistance for individuals described in
section 1902(a)(10)(A)(i)(VIII) who are nonpregnant
childless adults with respect to whom the State may
require enrollment in benchmark coverage under section
1937 shall be equal to the percent specified in
subparagraph (B)(i) for such year.
(B)(i) The percent specified in this subparagraph for
a State for a year is equal to the Federal medical
assistance percentage (as defined in the first sentence
of subsection (b)) for the State increased by a number
of percentage points equal to the transition percentage
(specified in clause (ii) for the year) of the number
of percentage points by which--
(I) such Federal medical assistance
percentage for the State, is less than
(II) the percent specified in subsection
(y)(1) for the year.
(ii) The transition percentage specified in this
clause for--
(I) 2014 is 50 percent;
(II) 2015 is 60 percent;
(III) 2016 is 70 percent;
(IV) 2017 is 80 percent;
(V) 2018 is 90 percent; and
(VI) 2019 and each subsequent year is 100
percent.
(3) A State is an expansion State if, on the date of
the enactment of the Patient Protection and Affordable
Care Act, the State offers health benefits coverage
statewide to parents and nonpregnant, childless adults
whose income is at least 100 percent of the poverty
line, that includes inpatient hospital services, is not
dependent on access to employer coverage, employer
contribution, or employment and is not limited to
premium assistance, hospital-only benefits, a high
deductible health plan, or alternative benefits under a
demonstration program authorized under section 1938. A
State that offers health benefits coverage to only
parents or only nonpregnant childless adults described
in the preceding sentence shall not be considered to be
an expansion State.
(aa)(1) Notwithstanding subsection (b), beginning January 1,
2011, the Federal medical assistance percentage for a fiscal
year for a disaster-recovery FMAP adjustment State shall be
equal to the following:
(A) In the case of the first fiscal year (or part of
a fiscal year) for which this subsection applies to the
State, the State's regular FMAP shall be increased by
50 percent of the number of percentage points by which
the State's regular FMAP for such fiscal year is less
than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
after the application of only subsection (a) of section
5001 of Public Law 111-5 (if applicable to the
preceding fiscal year) and without regard to this
subsection, subsections (y) and (z), and subsections
(b) and (c) of section 5001 of Public Law 111-5.
(B) In the case of the second or any succeeding
fiscal year for which this subsection applies to the
State, the State's regular FMAP for such fiscal year
shall be increased by 25 percent (or 50 percent in the
case of fiscal year 2013) of the number of percentage
points by which the State's regular FMAP for such
fiscal year is less than the Federal medical assistance
percentage received by the State during the preceding
fiscal year.
(2) In this subsection, the term ``disaster-recovery FMAP
adjustment State'' means a State that is one of the 50 States
or the District of Columbia, for which, at any time during the
preceding 7 fiscal years, the President has declared a major
disaster under section 401 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act and determined as a result
of such disaster that every county or parish in the State
warrant individual and public assistance or public assistance
from the Federal Government under such Act and for which--
(A) in the case of the first fiscal year (or part of
a fiscal year) for which this subsection applies to the
State, the State's regular FMAP for the fiscal year is
less than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
after the application of only subsection (a) of section
5001 of Public Law 111-5 (if applicable to the
preceding fiscal year) and without regard to this
subsection, subsections (y) and (z), and subsections
(b) and (c) of section 5001 of Public Law 111-5, by at
least 3 percentage points; and
(B) in the case of the second or any succeeding
fiscal year for which this subsection applies to the
State, the State's regular FMAP for the fiscal year is
less than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
under this subsection by at least 3 percentage points.
(3) In this subsection, the term ``regular FMAP'' means, for
each fiscal year for which this subsection applies to a State,
the Federal medical assistance percentage that would otherwise
apply to the State for the fiscal year, as determined under
subsection (b) and without regard to this subsection,
subsections (y) and (z), and section 10202 of the Patient
Protection and Affordable Care Act.
(4) The Federal medical assistance percentage determined for
a disaster-recovery FMAP adjustment State under paragraph (1)
shall apply for purposes of this title (other than with respect
to disproportionate share hospital payments described in
section 1923 and payments under this title that are based on
the enhanced FMAP described in 2105(b)) and shall not apply
with respect to payments under title IV (other than under part
E of title IV) or payments under title XXI.
(bb)(1) For purposes of this title, the term ``counseling and
pharmacotherapy for cessation of tobacco use by pregnant
women'' means diagnostic, therapy, and counseling services and
pharmacotherapy (including the coverage of prescription and
nonprescription tobacco cessation agents approved by the Food
and Drug Administration) for cessation of tobacco use by
pregnant women who use tobacco products or who are being
treated for tobacco use that is furnished--
(A) by or under the supervision of a physician; or
(B) by any other health care professional who--
(i) is legally authorized to furnish such
services under State law (or the State
regulatory mechanism provided by State law) of
the State in which the services are furnished;
and
(ii) is authorized to receive payment for
other services under this title or is
designated by the Secretary for this purpose.
(2) Subject to paragraph (3), such term is limited to--
(A) services recommended with respect to pregnant
women in ``Treating Tobacco Use and Dependence: 2008
Update: A Clinical Practice Guideline'', published by
the Public Health Service in May 2008, or any
subsequent modification of such Guideline; and
(B) such other services that the Secretary recognizes
to be effective for cessation of tobacco use by
pregnant women.
(3) Such term shall not include coverage for drugs or
biologicals that are not otherwise covered under this title.
(4) A woman shall continue to be treated as described in this
subsection as a pregnant woman through the end of the 1-year
period beginning on the date of the birth of a child of the
woman.
(cc) Requirement for Certain States.--Notwithstanding
subsections (y), (z), and (aa), in the case of a State that
requires political subdivisions within the State to contribute
toward the non-Federal share of expenditures required under the
State plan under section 1902(a)(2), the State shall not be
eligible for an increase in its Federal medical assistance
percentage under such subsections if it requires that political
subdivisions pay a greater percentage of the non-Federal share
of such expenditures, or a greater percentage of the non-
Federal share of payments under section 1923, than the
respective percentages that would have been required by the
State under the State plan under this title, State law, or
both, as in effect on December 31, 2009, and without regard to
any such increase. Voluntary contributions by a political
subdivision to the non-Federal share of expenditures under the
State plan under this title or to the non-Federal share of
payments under section 1923, shall not be considered to be
required contributions for purposes of this subsection. The
treatment of voluntary contributions, and the treatment of
contributions required by a State under the State plan under
this title, or State law, as provided by this subsection, shall
also apply to the increases in the Federal medical assistance
percentage under section 5001 of the American Recovery and
Reinvestment Act of 2009.
(dd) Increased FMAP for Additional Expenditures for Primary
Care Services.--Notwithstanding subsection (b), with respect to
the portion of the amounts expended for medical assistance for
services described in section 1902(a)(13)(C) furnished on or
after January 1, 2013, and before January 1, 2015, that is
attributable to the amount by which the minimum payment rate
required under such section (or, by application, section
1932(f)) exceeds the payment rate applicable to such services
under the State plan as of July 1, 2009, the Federal medical
assistance percentage for a State that is one of the 50 States
or the District of Columbia shall be equal to 100 percent. The
preceding sentence does not prohibit the payment of Federal
financial participation based on the Federal medical assistance
percentage for amounts in excess of those specified in such
sentence.
* * * * * * *
use of enrollment fees, premiums, deductions, cost sharing, and similar
charges
Sec. 1916. (a) Subject to subsections (g), (i), and (j), the
State plan shall provide that in the case of individuals
described in subparagraph (A) or (E)(i) of section 1902(a)(10)
who are eligible under the plan--
(1) no enrollment fee, premium, or similar charge
will be imposed under the plan (except for a premium
imposed under subsection (c));
(2) no deduction, cost sharing or similar charge will
be imposed under the plan with respect to--
(A) services furnished to individuals under
18 years of age (and, at the option of the
State, individuals under 21, 20, or 19 years of
age, or any reasonable category of individuals
18 years of age or over),
(B) services furnished to pregnant women, if
such services relate to the pregnancy or to any
other medical condition which may complicate
the pregnancy, and counseling and
pharmacotherapy for cessation of tobacco use by
pregnant women (as defined in section 1905(bb))
and covered outpatient drugs (as defined in
subsection (k)(2) of section 1927 and including
nonprescription drugs described in subsection
(d)(2) of such section) that are prescribed for
purposes of promoting, and when used to
promote, tobacco cessation by pregnant women
(and women described in section 1905(bb) as
pregnant women pursuant to paragraph (4) of
such section) in accordance with the Guideline
referred to in section 1905(bb)(2)(A) (or, at
the option of the State, any services furnished
to pregnant women),
(C) services furnished to any individual who
is an inpatient in a hospital, nursing
facility, intermediate care facility for the
mentally retarded, or other medical
institution, if such individual is required, as
a condition of receiving services in such
institution under the State plan, to spend for
costs of medical care all but a minimal amount
of his income required for personal needs,
(D) emergency services (as defined by the
Secretary), family planning services and
supplies described in section 1905(a)(4)(C), or
(E) services furnished to an individual who
is receiving hospice care (as defined in
section 1905(o)); and
(3) any deduction, cost sharing, or similar charge
imposed under the plan with respect to other such
individuals or other care and services will be nominal
in amount (as determined by the Secretary in
regulations which shall, if the definition of
``nominal'' under the regulations in effect on July 1,
1982 is changed, take into account the level of cash
assistance provided in such State and such other
criteria as the Secretary determines to be
appropriate); except that a deduction, cost-sharing, or
similar charge of up to twice the nominal amount
established for outpatient services may be imposed by a
State under a waiver granted by the Secretary for
services received at a hospital emergency room if the
services are not emergency services (referred to in
paragraph (2)(D)) and the State has established to the
satisfaction of the Secretary that individuals eligible
for services under the plan have actually available and
accessible to them alternative sources of nonemergency,
outpatient services.
(b) The State plan shall provide that in the case of
individuals other than those described in subparagraph (A) or
(E) of section 1902(a)(10) who are eligible under the plan--
(1) there may be imposed an enrollment fee, premium,
or similar charge, which (as determined in accordance
with standards prescribed by the Secretary) is related
to the individual's income,
(2) no deduction, cost sharing, or similar charge
will be imposed under the plan with respect to--
(A) services furnished to individuals under
18 years of age (and, at the option of the
State, individuals under 21, 20, or 19 years of
age, or any reasonable category of individuals
18 years of age or over),
(B) services furnished to pregnant women, if
such services relate to the pregnancy or to any
other medical condition which may complicate
the pregnancy, and counseling and
pharmacotherapy for cessation of tobacco use by
pregnant women (as defined in section 1905(bb))
and covered outpatient drugs (as defined in
subsection (k)(2) of section 1927 and including
nonprescription drugs described in subsection
(d)(2) of such section) that are prescribed for
purposes of promoting, and when used to
promote, tobacco cessation by pregnant women
(and women described in section 1905(bb) as
pregnant women pursuant to paragraph (4) of
such section) in accordance with the Guideline
referred to in section 1905(bb)(2)(A) (or, at
the option of the State, any services furnished
to pregnant women),
(C) services furnished to any individual who
is an inpatient in a hospital, nursing
facility, intermediate care facility for the
mentally retarded, or other medical
institution, if such individual is required, as
a condition of receiving services in such
institution under the State plan, to spend for
costs of medical care all but a minimal amount
of his income required for personal needs,
(D) emergency services (as defined by the
Secretary), family planning services and
supplies described in section 1905(a)(4)(C), or
(E) services furnished to an individual who
is receiving hospice care (as defined in
section 1905(o)); and
(3) any deduction, cost sharing, or similar charge
imposed under the plan with respect to other such
individuals or other care and services will be nominal
in amount (as determined by the Secretary in
regulations which shall, if the definition of
``nominal'' under the regulations in effect on July 1,
1982 is changed, take into account the level of cash
assistance provided in such State and such other
criteria as the Secretary determines to be
appropriate); except that a deduction, cost-sharing, or
similar charge of up to twice the nominal amount
established for outpatient services may be imposed by a
State under a waiver granted by the Secretary for
services received at a hospital emergency room if the
services are not emergency services (referred to in
paragraph (2)(D)) and the State has established to the
satisfaction of the Secretary that individuals eligible
for services under the plan have actually available and
accessible to them alternative sources of nonemergency,
outpatient services.
(c)(1) The State plan of a State may at the option of the
State provide for imposing a monthly premium (in an amount that
does not exceed the limit established under paragraph (2)) with
respect to an individual described in subparagraph (A) or (B)
of section 1902(l)(1) who is receiving medical assistance on
the basis of section 1902(a)(10)(A)(ii)(IX) and whose family
income (as determined in accordance with the methodology
specified in section 1902(l)(3)) equals or exceeds 150 percent
of the income official poverty line (as defined by the Office
of Management and Budget, and revised annually in accordance
with section 673(2) of the Omnibus Budget Reconciliation Act of
1981) applicable to a family of the size involved.
(2) In no case may the amount of any premium imposed under
paragraph (1) exceed 10 percent of the amount by which the
family income (less expenses for the care of a dependent child)
of an individual exceeds 150 percent of the line described in
paragraph (1).
(3) A State shall not require prepayment of a premium imposed
pursuant to paragraph (1) and shall not terminate eligibility
of an individual for medical assistance under this title on the
basis of failure to pay any such premium until such failure
continues for a period of not less than 60 days. The State may
waive payment of any such premium in any case where the State
determines that requiring such payment would create an undue
hardship.
(4) A State may permit State or local funds available under
other programs to be used for payment of a premium imposed
under paragraph (1). Payment of a premium with such funds shall
not be counted as income to the individual with respect to whom
such payment is made.
(d) With respect to a qualified disabled and working
individual described in section 1905(s) whose income (as
determined under paragraph (3) of that section) exceeds 150
percent of the official poverty line referred to in that
paragraph, the State plan of a State may provide for the
charging of a premium (expressed as a percentage of the
medicare cost-sharing described in section 1905(p)(3)(A)(i)
provided with respect to the individual) according to a sliding
scale under which such percentage increases from 0 percent to
100 percent, in reasonable increments (as determined by the
Secretary), as the individual's income increases from 150
percent of such poverty line to 200 percent of such poverty
line.
(e) The State plan shall require that no provider
participating under the State plan may deny care or services to
an individual eligible for such care or services under the plan
on account of such individual's inability to pay a deduction,
cost sharing, or similar charge. The requirements of this
subsection shall not extinguish the liability of the individual
to whom the care or services were furnished for payment of the
deduction, cost sharing, or similar charge.
(f) No deduction, cost sharing, or similar charge may be
imposed under any waiver authority of the Secretary, except as
provided in subsections (a)(3) and (b)(3) and section 1916A,
unless such waiver is for a demonstration project which the
Secretary finds after public notice and opportunity for
comment--
(1) will test a unique and previously untested use of
copayments,
(2) is limited to a period of not more than two
years,
(3) will provide benefits to recipients of medical
assistance which can reasonably be expected to be
equivalent to the risks to the recipients,
(4) is based on a reasonable hypothesis which the
demonstration is designed to test in a methodologically
sound manner, including the use of control groups of
similar recipients of medical assistance in the area,
and
(5) is voluntary, or makes provision for assumption
of liability for preventable damage to the health of
recipients of medical assistance resulting from
involuntary participation.
(g) With respect to individuals provided medical assistance
only under subclause (XV) or (XVI) of section
1902(a)(10)(A)(ii)--
(1) a State may (in a uniform manner for individuals
described in either such subclause)--
(A) require such individuals to pay premiums
or other cost-sharing charges set on a sliding
scale based on income that the State may
determine; and
(B) require payment of 100 percent of such
premiums for such year in the case of such an
individual who has income for a year that
exceeds 250 percent of the income official
poverty line (referred to in subsection (c)(1))
applicable to a family of the size involved,
except that in the case of such an individual
who has income for a year that does not exceed
450 percent of such poverty line, such
requirement may only apply to the extent such
premiums do not exceed 7.5 percent of such
income; and
(2) such State shall require payment of 100 percent
of such premiums for a year by such an individual whose
adjusted gross income (as defined in section 62 of the
Internal Revenue Code of 1986) for such year exceeds
$75,000, except that a State may choose to subsidize
such premiums by using State funds which may not be
federally matched under this title.
In the case of any calendar year beginning after 2000, the
dollar amount specified in paragraph (2) shall be increased in
accordance with the provisions of section 215(i)(2)(A)(ii).
(h) In applying this section and subsections (c) and (e) of
section 1916A, with respect to cost sharing that is ``nominal''
in amount, the Secretary shall increase such ``nominal''
amounts for each year (beginning with 2006) by the annual
percentage increase in the medical care component of the
consumer price index for all urban consumers (U.S. city
average) as rounded up in an appropriate manner.
(i)(1) With respect to disabled children provided medical
assistance under section 1902(a)(10)(A)(ii)(XIX), subject to
paragraph (2), a State may (in a uniform manner for such
children) require the families of such children to pay monthly
premiums set on a sliding scale based on family income.
(2) A premium requirement imposed under paragraph (1) may
only apply to the extent that--
(A) in the case of a disabled child described in that
paragraph whose family income--
(i) does not exceed 200 percent of the
poverty line, the aggregate amount of such
premium and any premium that the parent is
required to pay for family coverage under
section 1902(cc)(2)(A)(i) and other cost-
sharing charges do not exceed 5 percent of the
family's income; and
(ii) exceeds 200, but does not exceed 300,
percent of the poverty line, the aggregate
amount of such premium and any premium that the
parent is required to pay for family coverage
under section 1902(cc)(2)(A)(i) and other cost-
sharing charges do not exceed 7.5 percent of
the family's income; and
(B) the requirement is imposed consistent with
section 1902(cc)(2)(A)(ii)(I).
(3) A State shall not require prepayment of a premium imposed
pursuant to paragraph (1) and shall not terminate eligibility
of a child under section 1902(a)(10)(A)(ii)(XIX) for medical
assistance under this title on the basis of failure to pay any
such premium until such failure continues for a period of at
least 60 days from the date on which the premium became past
due. The State may waive payment of any such premium in any
case where the State determines that requiring such payment
would create an undue hardship.
(j) No Premiums or Cost Sharing for Indians Furnished Items
or Services Directly by Indian Health Programs or Through
Referral Under Contract Health Services.--
(1) No cost sharing for items or services furnished
to indians through indian health programs.--
(A) In general.--No enrollment fee, premium,
or similar charge, and no deduction, copayment,
cost sharing, or similar charge shall be
imposed against an Indian who is furnished an
item or service directly by the Indian Health
Service, an Indian Tribe, Tribal Organization,
or Urban Indian Organization or through
referral under contract health services for
which payment may be made under this title.
(B) No reduction in amount of payment to
indian health providers.--Payment due under
this title to the Indian Health Service, an
Indian Tribe, Tribal Organization, or Urban
Indian Organization, or a health care provider
through referral under contract health services
for the furnishing of an item or service to an
Indian who is eligible for assistance under
such title, may not be reduced by the amount of
any enrollment fee, premium, or similar charge,
or any deduction, copayment, cost sharing, or
similar charge that would be due from the
Indian but for the operation of subparagraph
(A).
(2) Rule of construction.--Nothing in this subsection
shall be construed as restricting the application of
any other limitations on the imposition of premiums or
cost sharing that may apply to an individual receiving
medical assistance under this title who is an Indian.
* * * * * * *
liens, adjustments and recoveries, and transfers of assets
Sec. 1917. (a)(1) No lien may be imposed against the property
of any individual prior to his death on account of medical
assistance paid or to be paid on his behalf under the State
plan, except--
(A) pursuant to the judgment of a court on account of
benefits incorrectly paid on behalf of such individual,
or
(B) in the case of the real property of an
individual--
(i) who is an inpatient in a nursing
facility, intermediate care facility for the
mentally retarded, or other medical
institution, if such individual is required, as
a condition of receiving services in such
institution under the State plan, to spend for
costs of medical care all but a minimal amount
of his income required for personal needs, and
(ii) with respect to whom the State
determines, after notice and opportunity for a
hearing (in accordance with procedures
established by the State), that he cannot
reasonably be expected to be discharged from
the medical institution and to return home,
except as provided in paragraph (2).
(2) No lien may be imposed under paragraph (1)(B) on such
individual's home if--
(A) the spouse of such individual,
(B) such individual's child who is under age 21, or
(with respect to States eligible to participate in the
State program established under title XVI) is blind or
permanently and totally disabled, or (with respect to
States which are not eligible to participate in such
program) is blind or disabled as defined in section
1614, or
(C) a sibling of such individual (who has an equity
interest in such home and who was residing in such
individual's home for a period of at least one year
immediately before the date of the individual's
admission to the medical institution),
is lawfully residing in such home.
(3) Any lien imposed with respect to an individual pursuant
to paragraph (1)(B) shall dissolve upon that individual's
discharge from the medical institution and return home.
(b)(1) No adjustment or recovery of any medical assistance
correctly paid on behalf of an individual under the State plan
may be made, except that the State shall seek adjustment or
recovery of any medical assistance correctly paid on behalf of
an individual under the State plan in the case of the following
individuals:
(A) In the case of an individual described in
subsection (a)(1)(B), the State shall seek adjustment
or recovery from the individual's estate or upon sale
of the property subject to a lien imposed on account of
medical assistance paid on behalf of the individual.
(B) In the case of an individual who was 55 years of
age or older when the individual received such medical
assistance, the State shall seek adjustment or recovery
from the individual's estate, but only for medical
assistance consisting of--
(i) nursing facility services, home and
community-based services, and related hospital
and prescription drug services, or
(ii) at the option of the State, any items or
services under the State plan (but not
including medical assistance for medicare cost-
sharing or for benefits described in section
1902(a)(10)(E)).
(C)(i) In the case of an individual who has received
(or is entitled to receive) benefits under a long-term
care insurance policy in connection with which assets
or resources are disregarded in the manner described in
clause (ii), except as provided in such clause, the
State shall seek adjustment or recovery from the
individual's estate on account of medical assistance
paid on behalf of the individual for nursing facility
and other long-term care services.
(ii) Clause (i) shall not apply in the case of an
individual who received medical assistance under a
State plan of a State which had a State plan amendment
approved as of May 14, 1993, and which satisfies clause
(iv), or which has a State plan amendment that provides
for a qualified State long-term care insurance
partnership (as defined in clause (iii)) which provided
for the disregard of any assets or resources--
(I) to the extent that payments are made
under a long-term care insurance policy; or
(II) because an individual has received (or
is entitled to receive) benefits under a long-
term care insurance policy.
(iii) For purposes of this paragraph, the term
``qualified State long-term care insurance
partnership'' means an approved State plan amendment
under this title that provides for the disregard of any
assets or resources in an amount equal to the insurance
benefit payments that are made to or on behalf of an
individual who is a beneficiary under a long-term care
insurance policy if the following requirements are met:
(I) The policy covers an insured who was a
resident of such State when coverage first
became effective under the policy.
(II) The policy is a qualified long-term care
insurance policy (as defined in section
7702B(b) of the Internal Revenue Code of 1986)
issued not earlier than the effective date of
the State plan amendment.
(III) The policy meets the model regulations
and the requirements of the model Act specified
in paragraph (5).
(IV) If the policy is sold to an individual
who--
(aa) has not attained age 61 as of
the date of purchase, the policy
provides compound annual inflation
protection;
(bb) has attained age 61 but has not
attained age 76 as of such date, the
policy provides some level of inflation
protection; and
(cc) has attained age 76 as of such
date, the policy may (but is not
required to) provide some level of
inflation protection.
(V) The State Medicaid agency under section
1902(a)(5) provides information and technical
assistance to the State insurance department on
the insurance department's role of assuring
that any individual who sells a long-term care
insurance policy under the partnership receives
training and demonstrates evidence of an
understanding of such policies and how they
relate to other public and private coverage of
long-term care.
(VI) The issuer of the policy provides
regular reports to the Secretary, in accordance
with regulations of the Secretary, that include
notification regarding when benefits provided
under the policy have been paid and the amount
of such benefits paid, notification regarding
when the policy otherwise terminates, and such
other information as the Secretary determines
may be appropriate to the administration of
such partnerships.
(VII) The State does not impose any
requirement affecting the terms or benefits of
such a policy unless the State imposes such
requirement on long-term care insurance
policies without regard to whether the policy
is covered under the partnership or is offered
in connection with such a partnership.
In the case of a long-term care insurance policy which
is exchanged for another such policy, subclause (I)
shall be applied based on the coverage of the first
such policy that was exchanged. For purposes of this
clause and paragraph (5), the term ``long-term care
insurance policy'' includes a certificate issued under
a group insurance contract.
(iv) With respect to a State which had a State plan
amendment approved as of May 14, 1993, such a State
satisfies this clause for purposes of clause (ii) if
the Secretary determines that the State plan amendment
provides for consumer protection standards which are no
less stringent than the consumer protection standards
which applied under such State plan amendment as of
December 31, 2005.
(v) The regulations of the Secretary required under
clause (iii)(VI) shall be promulgated after
consultation with the National Association of Insurance
Commissioners, issuers of long-term care insurance
policies, States with experience with long-term care
insurance partnership plans, other States, and
representatives of consumers of long-term care
insurance policies, and shall specify the type and
format of the data and information to be reported and
the frequency with which such reports are to be made.
The Secretary, as appropriate, shall provide copies of
the reports provided in accordance with that clause to
the State involved.
(vi) The Secretary, in consultation with other
appropriate Federal agencies, issuers of long-term care
insurance, the National Association of Insurance
Commissioners, State insurance commissioners, States
with experience with long-term care insurance
partnership plans, other States, and representatives of
consumers of long-term care insurance policies, shall
develop recommendations for Congress to authorize and
fund a uniform minimum data set to be reported
electronically by all issuers of long-term care
insurance policies under qualified State long-term care
insurance partnerships to a secure, centralized
electronic query and report-generating mechanism that
the State, the Secretary, and other Federal agencies
can access.
(2) Any adjustment or recovery under paragraph (1) may be
made only after the death of the individual's surviving spouse,
if any, and only at a time--
(A) when he has no surviving child who is under age
21, or (with respect to States eligible to participate
in the State program established under title XVI) is
blind or permanently and totally disabled, or (with
respect to States which are not eligible to participate
in such program) is blind or disabled as defined in
section 1614; and
(B) in the case of a lien on an individual's home
under subsection (a)(1)(B), when--
(i) no sibling of the individual (who was
residing in the individual's home for a period
of at least one year immediately before the
date of the individual's admission to the
medical institution), and
(ii) no son or daughter of the individual
(who was residing in the individual's home for
a period of at least two years immediately
before the date of the individual's admission
to the medical institution, and who establishes
to the satisfaction of the State that he or she
provided care to such individual which
permitted such individual to reside at home
rather than in an institution),
is lawfully residing in such home who has lawfully
resided in such home on a continuous basis since the
date of the individual's admission to the medical
institution.
(3)(A) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
which the agency shall waive the application of this subsection
(other than paragraph (1)(C)) if such application would work an
undue hardship as determined on the basis of criteria
established by the Secretary.
(B) The standards specified by the Secretary under
subparagraph (A) shall require that the procedures established
by the State agency under subparagraph (A) exempt income,
resources, and property that are exempt from the application of
this subsection as of April 1, 2003, under manual instructions
issued to carry out this subsection (as in effect on such date)
because of the Federal responsibility for Indian Tribes and
Alaska Native Villages. Nothing in this subparagraph shall be
construed as preventing the Secretary from providing additional
estate recovery exemptions under this title for Indians.
(4) For purposes of this subsection, the term ``estate'',
with respect to a deceased individual--
(A) shall include all real and personal property and
other assets included within the individual's estate,
as defined for purposes of State probate law; and
(B) may include, at the option of the State (and
shall include, in the case of an individual to whom
paragraph (1)(C)(i) applies), any other real and
personal property and other assets in which the
individual had any legal title or interest at the time
of death (to the extent of such interest), including
such assets conveyed to a survivor, heir, or assign of
the deceased individual through joint tenancy, tenancy
in common, survivorship, life estate, living trust, or
other arrangement.
(5)(A) For purposes of clause (iii)(III), the model
regulations and the requirements of the model Act specified in
this paragraph are:
(i) In the case of the model regulation, the
following requirements:
(I) Section 6A (relating to guaranteed
renewal or noncancellability), other than
paragraph (5) thereof, and the requirements of
section 6B of the model Act relating to such
section 6A.
(II) Section 6B (relating to prohibitions on
limitations and exclusions) other than
paragraph (7) thereof.
(III) Section 6C (relating to extension of
benefits).
(IV) Section 6D (relating to continuation or
conversion of coverage).
(V) Section 6E (relating to discontinuance
and replacement of policies).
(VI) Section 7 (relating to unintentional
lapse).
(VII) Section 8 (relating to disclosure),
other than sections 8F, 8G, 8H, and 8I thereof.
(VIII) Section 9 (relating to required
disclosure of rating practices to consumer).
(IX) Section 11 (relating to prohibitions
against post-claims underwriting).
(X) Section 12 (relating to minimum
standards).
(XI) Section 14 (relating to application
forms and replacement coverage).
(XII) Section 15 (relating to reporting
requirements).
(XIII) Section 22 (relating to filing
requirements for marketing).
(XIV) Section 23 (relating to standards for
marketing), including inaccurate completion of
medical histories, other than paragraphs (1),
(6), and (9) of section 23C.
(XV) Section 24 (relating to suitability).
(XVI) Section 25 (relating to prohibition
against preexisting conditions and probationary
periods in replacement policies or
certificates).
(XVII) The provisions of section 26 relating
to contingent nonforfeiture benefits, if the
policyholder declines the offer of a
nonforfeiture provision described in paragraph
(4).
(XVIII) Section 29 (relating to standard
format outline of coverage).
(XIX) Section 30 (relating to requirement to
deliver shopper's guide).
(ii) In the case of the model Act, the following:
(I) Section 6C (relating to preexisting
conditions).
(II) Section 6D (relating to prior
hospitalization).
(III) The provisions of section 8 relating to
contingent nonforfeiture benefits.
(IV) Section 6F (relating to right to
return).
(V) Section 6G (relating to outline of
coverage).
(VI) Section 6H (relating to requirements for
certificates under group plans).
(VII) Section 6J (relating to policy
summary).
(VIII) Section 6K (relating to monthly
reports on accelerated death benefits).
(IX) Section 7 (relating to incontestability
period).
(B) For purposes of this paragraph and paragraph (1)(C)--
(i) the terms ``model regulation'' and ``model Act''
mean the long-term care insurance model regulation, and
the long-term care insurance model Act, respectively,
promulgated by the National Association of Insurance
Commissioners (as adopted as of October 2000);
(ii) any provision of the model regulation or model
Act listed under subparagraph (A) shall be treated as
including any other provision of such regulation or Act
necessary to implement the provision; and
(iii) with respect to a long-term care insurance
policy issued in a State, the policy shall be deemed to
meet applicable requirements of the model regulation or
the model Act if the State plan amendment under
paragraph (1)(C)(iii) provides that the State insurance
commissioner for the State certifies (in a manner
satisfactory to the Secretary) that the policy meets
such requirements.
(C) Not later than 12 months after the National Association
of Insurance Commissioners issues a revision, update, or other
modification of a model regulation or model Act provision
specified in subparagraph (A), or of any provision of such
regulation or Act that is substantively related to a provision
specified in such subparagraph, the Secretary shall review the
changes made to the provision, determine whether incorporating
such changes into the corresponding provision specified in such
subparagraph would improve qualified State long-term care
insurance partnerships, and if so, shall incorporate the
changes into such provision.
(c)(1)(A) In order to meet the requirements of this
subsection for purposes of section 1902(a)(18), the State plan
must provide that if an institutionalized individual or the
spouse of such an individual (or, at the option of a State, a
noninstitutionalized individual or the spouse of such an
individual) disposes of assets for less than fair market value
on or after the look-back date specified in subparagraph
(B)(i), the individual is ineligible for medical assistance for
services described in subparagraph (C)(i) (or, in the case of a
noninstitutionalized individual, for the services described in
subparagraph (C)(ii)) during the period beginning on the date
specified in subparagraph (D) and equal to the number of months
specified in subparagraph (E).
(B)(i) The look-back date specified in this subparagraph is a
date that is 36 months (or, in the case of payments from a
trust or portions of a trust that are treated as assets
disposed of by the individual pursuant to paragraph (3)(A)(iii)
or (3)(B)(ii) of subsection (d) or in the case of any other
disposal of assets made on or after the date of the enactment
of the Deficit Reduction Act of 2005, 60 months) before the
date specified in clause (ii).
(ii) The date specified in this clause, with respect to--
(I) an institutionalized individual is the first date
as of which the individual both is an institutionalized
individual and has applied for medical assistance under
the State plan, or
(II) a noninstitutionalized individual is the date on
which the individual applies for medical assistance
under the State plan or, if later, the date on which
the individual disposes of assets for less than fair
market value.
(C)(i) The services described in this subparagraph with
respect to an institutionalized individual are the following:
(I) Nursing facility services.
(II) A level of care in any institution equivalent to
that of nursing facility services.
(III) Home or community-based services furnished
under a waiver granted under subsection (c) or (d) of
section 1915.
(ii) The services described in this subparagraph with respect
to a noninstitutionalized individual are services (not
including any services described in clause (i)) that are
described in paragraph (7), (22), or (24) of section 1905(a),
and, at the option of a State, other long-term care services
for which medical assistance is otherwise available under the
State plan to individuals requiring long-term care.
(D)(i) In the case of a transfer of asset made before the
date of the enactment of the Deficit Reduction Act of 2005, the
date specified in this subparagraph is the first day of the
first month during or after which assets have been transferred
for less than fair market value and which does not occur in any
other periods of ineligibility under this subsection.
(ii) In the case of a transfer of asset made on or after the
date of the enactment of the Deficit Reduction Act of 2005, the
date specified in this subparagraph is the first day of a month
during or after which assets have been transferred for less
than fair market value, or the date on which the individual is
eligible for medical assistance under the State plan and would
otherwise be receiving institutional level care described in
subparagraph (C) based on an approved application for such care
but for the application of the penalty period, whichever is
later, and which does not occur during any other period of
ineligibility under this subsection.
(E)(i) With respect to an institutionalized individual, the
number of months of ineligibility under this subparagraph for
an individual shall be equal to--
(I) the total, cumulative uncompensated value of all
assets transferred by the individual (or individual's
spouse) on or after the look-back date specified in
subparagraph (B)(i), divided by
(II) the average monthly cost to a private patient of
nursing facility services in the State (or, at the
option of the State, in the community in which the
individual is institutionalized) at the time of
application.
(ii) With respect to a noninstitutionalized individual, the
number of months of ineligibility under this subparagraph for
an individual shall not be greater than a number equal to--
(I) the total, cumulative uncompensated value of all
assets transferred by the individual (or individual's
spouse) on or after the look-back date specified in
subparagraph (B)(i), divided by
(II) the average monthly cost to a private patient of
nursing facility services in the State (or, at the
option of the State, in the community in which the
individual is institutionalized) at the time of
application.
(iii) The number of months of ineligibility otherwise
determined under clause (i) or (ii) with respect to the
disposal of an asset shall be reduced--
(I) in the case of periods of ineligibility
determined under clause (i), by the number of months of
ineligibility applicable to the individual under clause
(ii) as a result of such disposal, and
(II) in the case of periods of ineligibility
determined under clause (ii), by the number of months
of ineligibility applicable to the individual under
clause (i) as a result of such disposal.
(iv) A State shall not round down, or otherwise disregard any
fractional period of ineligibility determined under clause (i)
or (ii) with respect to the disposal of assets.
(F) For purposes of this paragraph, the purchase of an
annuity shall be treated as the disposal of an asset for less
than fair market value unless--
(i) the State is named as the remainder beneficiary
in the first position for at least the total amount of
medical assistance paid on behalf of the
institutionalized individual under this title; or
(ii) the State is named as such a beneficiary in the
second position after the community spouse or minor or
disabled child and is named in the first position if
such spouse or a representative of such child disposes
of any such remainder for less than fair market value.
(G) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes an annuity purchased by
or on behalf of an annuitant who has applied for medical
assistance with respect to nursing facility services or other
long-term care services under this title unless--
(i) the annuity is--
(I) an annuity described in subsection (b) or
(q) of section 408 of the Internal Revenue Code
of 1986; or
(II) purchased with proceeds from--
(aa) an account or trust described in
subsection (a), (c), or (p) of section
408 of such Code;
(bb) a simplified employee pension
(within the meaning of section 408(k)
of such Code); or
(cc) a Roth IRA described in section
408A of such Code; or
(ii) the annuity--
(I) is irrevocable and nonassignable;
(II) is actuarially sound (as determined in
accordance with actuarial publications of the
Office of the Chief Actuary of the Social
Security Administration); and
(III) provides for payments in equal amounts
during the term of the annuity, with no
deferral and no balloon payments made.
(H) Notwithstanding the preceding provisions of this
paragraph, in the case of an individual (or individual's
spouse) who makes multiple fractional transfers of assets in
more than 1 month for less than fair market value on or after
the applicable look-back date specified in subparagraph (B), a
State may determine the period of ineligibility applicable to
such individual under this paragraph by--
(i) treating the total, cumulative uncompensated
value of all assets transferred by the individual (or
individual's spouse) during all months on or after the
look-back date specified in subparagraph (B) as 1
transfer for purposes of clause (i) or (ii) (as the
case may be) of subparagraph (E); and
(ii) beginning such period on the earliest date which
would apply under subparagraph (D) to any of such
transfers.
(I) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes funds used to purchase
a promissory note, loan, or mortgage unless such note, loan, or
mortgage--
(i) has a repayment term that is actuarially sound
(as determined in accordance with actuarial
publications of the Office of the Chief Actuary of the
Social Security Administration);
(ii) provides for payments to be made in equal
amounts during the term of the loan, with no deferral
and no balloon payments made; and
(iii) prohibits the cancellation of the balance upon
the death of the lender.
In the case of a promissory note, loan, or mortgage that does
not satisfy the requirements of clauses (i) through (iii), the
value of such note, loan, or mortgage shall be the outstanding
balance due as of the date of the individual's application for
medical assistance for services described in subparagraph (C).
(J) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes the purchase of a life
estate interest in another individual's home unless the
purchaser resides in the home for a period of at least 1 year
after the date of the purchase.
(2) An individual shall not be ineligible for medical
assistance by reason of paragraph (1) to the extent that--
(A) the assets transferred were a home and title to
the home was transferred to--
(i) the spouse of such individual;
(ii) a child of such individual who (I) is
under age 21, or (II) (with respect to States
eligible to participate in the State program
established under title XVI) is blind or
permanently and totally disabled, or (with
respect to States which are not eligible to
participate in such program) is blind or
disabled as defined in section 1614;
(iii) a sibling of such individual who has an
equity interest in such home and who was
residing in such individual's home for a period
of at least one year immediately before the
date the individual becomes an
institutionalized individual; or
(iv) a son or daughter of such individual
(other than a child described in clause (ii))
who was residing in such individual's home for
a period of at least two years immediately
before the date the individual becomes an
institutionalized individual, and who (as
determined by the State) provided care to such
individual which permitted such individual to
reside at home rather than in such an
institution or facility;
(B) the assets--
(i) were transferred to the individual's
spouse or to another for the sole benefit of
the individual's spouse,
(ii) were transferred from the individual's
spouse to another for the sole benefit of the
individual's spouse,
(iii) were transferred to, or to a trust
(including a trust described in subsection
(d)(4)) established solely for the benefit of,
the individual's child described in
subparagraph (A)(ii)(II), or
(iv) were transferred to a trust (including a
trust described in subsection (d)(4))
established solely for the benefit of an
individual under 65 years of age who is
disabled (as defined in section 1614(a)(3));
(C) a satisfactory showing is made to the State (in
accordance with regulations promulgated by the
Secretary) that (i) the individual intended to dispose
of the assets either at fair market value, or for other
valuable consideration, (ii) the assets were
transferred exclusively for a purpose other than to
qualify for medical assistance, or (iii) all assets
transferred for less than fair market value have been
returned to the individual; or
(D) the State determines, under procedures
established by the State (in accordance with standards
specified by the Secretary), that the denial of
eligibility would work an undue hardship as determined
on the basis of criteria established by the Secretary.
The procedures established under subparagraph (D) shall
permit the facility in which the institutionalized
individual is residing to file an undue hardship waiver
application on behalf of the individual with the
consent of the individual or the personal
representative of the individual. While an application
for an undue hardship waiver is pending under
subparagraph (D) in the case of an individual who is a
resident of a nursing facility, if the application
meets such criteria as the Secretary specifies, the
State may provide for payments for nursing facility
services in order to hold the bed for the individual at
the facility, but not in excess of payments for 30
days.
(3) For purposes of this subsection, in the case of an asset
held by an individual in common with another person or persons
in a joint tenancy, tenancy in common, or similar arrangement,
the asset (or the affected portion of such asset) shall be
considered to be transferred by such individual when any action
is taken, either by such individual or by any other person,
that reduces or eliminates such individual's ownership or
control of such asset.
(4) A State (including a State which has elected treatment
under section 1902(f)) may not provide for any period of
ineligibility for an individual due to transfer of resources
for less than fair market value except in accordance with this
subsection. In the case of a transfer by the spouse of an
individual which results in a period of ineligibility for
medical assistance under a State plan for such individual, a
State shall, using a reasonable methodology (as specified by
the Secretary), apportion such period of ineligibility (or any
portion of such period) among the individual and the
individual's spouse if the spouse otherwise becomes eligible
for medical assistance under the State plan.
(5) In this subsection, the term ``resources'' has the
meaning given such term in section 1613, without regard to the
exclusion described in subsection (a)(1) thereof.
(d)(1) For purposes of determining an individual's
eligibility for, or amount of, benefits under a State plan
under this title, subject to paragraph (4), the rules specified
in paragraph (3) shall apply to a trust established by such
individual.
(2)(A) For purposes of this subsection, an individual shall
be considered to have established a trust if assets of the
individual were used to form all or part of the corpus of the
trust and if any of the following individuals established such
trust other than by will:
(i) The individual.
(ii) The individual's spouse.
(iii) A person, including a court or administrative
body, with legal authority to act in place of or on
behalf of the individual or the individual's spouse.
(iv) A person, including any court or administrative
body, acting at the direction or upon the request of
the individual or the individual's spouse.
(B) In the case of a trust the corpus of which includes
assets of an individual (as determined under subparagraph (A))
and assets of any other person or persons, the provisions of
this subsection shall apply to the portion of the trust
attributable to the assets of the individual.
(C) Subject to paragraph (4), this subsection shall apply
without regard to--
(i) the purposes for which a trust is established,
(ii) whether the trustees have or exercise any
discretion under the trust,
(iii) any restrictions on when or whether
distributions may be made from the trust, or
(iv) any restrictions on the use of distributions
from the trust.
(3)(A) In the case of a revocable trust--
(i) the corpus of the trust shall be considered
resources available to the individual,
(ii) payments from the trust to or for the benefit of
the individual shall be considered income of the
individual, and
(iii) any other payments from the trust shall be
considered assets disposed of by the individual for
purposes of subsection (c).
(B) In the case of an irrevocable trust--
(i) if there are any circumstances under which
payment from the trust could be made to or for the
benefit of the individual, the portion of the corpus
from which, or the income on the corpus from which,
payment to the individual could be made shall be
considered resources available to the individual, and
payments from that portion of the corpus or income--
(I) to or for the benefit of the individual,
shall be considered income of the individual,
and
(II) for any other purpose, shall be
considered a transfer of assets by the
individual subject to subsection (c); and
(ii) any portion of the trust from which, or any
income on the corpus from which, no payment could under
any circumstances be made to the individual shall be
considered, as of the date of establishment of the
trust (or, if later, the date on which payment to the
individual was foreclosed) to be assets disposed by the
individual for purposes of subsection (c), and the
value of the trust shall be determined for purposes of
such subsection by including the amount of any payments
made from such portion of the trust after such date.
(4) This subsection shall not apply to any of the following
trusts:
(A) A trust containing the assets of an individual
under age 65 who is disabled (as defined in section
1614(a)(3)) and which is established for the benefit of
such individual by the individual, a parent,
grandparent, legal guardian of the individual, or a
court if the State will receive all amounts remaining
in the trust upon the death of such individual up to an
amount equal to the total medical assistance paid on
behalf of the individual under a State plan under this
title.
(B) A trust established in a State for the benefit of
an individual if--
(i) the trust is composed only of pension,
Social Security, and other income to the
individual (and accumulated income in the
trust),
(ii) the State will receive all amounts
remaining in the trust upon the death of such
individual up to an amount equal to the total
medical assistance paid on behalf of the
individual under a State plan under this title,
and
(iii) the State makes medical assistance
available to individuals described in section
1902(a)(10)(A)(ii)(V), but does not make such
assistance available to individuals for nursing
facility services under section 1902(a)(10)(C).
(C) A trust containing the assets of an individual
who is disabled (as defined in section 1614(a)(3)) that
meets the following conditions:
(i) The trust is established and managed by a
nonprofit association.
(ii) A separate account is maintained for
each beneficiary of the trust, but, for
purposes of investment and management of funds,
the trust pools these accounts.
(iii) Accounts in the trust are established
solely for the benefit of individuals who are
disabled (as defined in section 1614(a)(3)) by
the parent, grandparent, or legal guardian of
such individuals, by such individuals, or by a
court.
(iv) To the extent that amounts remaining in
the beneficiary's account upon the death of the
beneficiary are not retained by the trust, the
trust pays to the State from such remaining
amounts in the account an amount equal to the
total amount of medical assistance paid on
behalf of the beneficiary under the State plan
under this title.
(5) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
which the agency waives the application of this subsection with
respect to an individual if the individual establishes that
such application would work an undue hardship on the individual
as determined on the basis of criteria established by the
Secretary.
(6) The term ``trust'' includes any legal instrument or
device that is similar to a trust but includes an annuity only
to such extent and in such manner as the Secretary specifies.
(e)(1) In order to meet the requirements of this section for
purposes of section 1902(a)(18), a State shall require, as a
condition for the provision of medical assistance for services
described in subsection (c)(1)(C)(i) (relating to long-term
care services) for an individual, the application of the
individual for such assistance (including any recertification
of eligibility for such assistance) shall disclose a
description of any interest the individual or community spouse
has in an annuity (or similar financial instrument, as may be
specified by the Secretary), regardless of whether the annuity
is irrevocable or is treated as an asset. Such application or
recertification form shall include a statement that under
paragraph (2) the State becomes a remainder beneficiary under
such an annuity or similar financial instrument by virtue of
the provision of such medical assistance.
(2)(A) In the case of disclosure concerning an annuity under
subsection (c)(1)(F), the State shall notify the issuer of the
annuity of the right of the State under such subsection as a
preferred remainder beneficiary in the annuity for medical
assistance furnished to the individual. Nothing in this
paragraph shall be construed as preventing such an issuer from
notifying persons with any other remainder interest of the
State's remainder interest under such subsection.
(B) In the case of such an issuer receiving notice under
subparagraph (A), the State may require the issuer to notify
the State when there is a change in the amount of income or
principal being withdrawn from the amount that was being
withdrawn at the time of the most recent disclosure described
in paragraph (1). A State shall take such information into
account in determining the amount of the State's obligations
for medical assistance or in the individual's eligibility for
such assistance.
(3) The Secretary may provide guidance to States on
categories of transactions that may be treated as a transfer of
asset for less than fair market value.
(4) Nothing in this subsection shall be construed as
preventing a State from denying eligibility for medical
assistance for an individual based on the income or resources
derived from an annuity described in paragraph (1).
(f)(1)(A) Notwithstanding any other provision of this title,
subject to subparagraphs (B) and (C) of this paragraph and
paragraph (2), in determining eligibility of an individual for
medical assistance with respect to nursing facility services or
other long-term care services, the individual shall not be
eligible for such assistance if the individual's equity
interest in the individual's home exceeds $500,000.
(B) A State may elect, without regard to the requirements of
section 1902(a)(1) (relating to statewideness) and section
1902(a)(10)(B) (relating to comparability), to apply
subparagraph (A) by substituting for ``$500,000'', an amount
that exceeds such amount, but does not exceed $750,000.
(C) The dollar amounts specified in this paragraph shall be
increased, beginning with 2011, from year to year based on the
percentage increase in the consumer price index for all urban
consumers (all items; United States city average), rounded to
the nearest $1,000.
(2) Paragraph (1) shall not apply with respect to an
individual if--
(A) the spouse of such individual, or
(B) such individual's child who is under age 21, or
(with respect to States eligible to participate in the
State program established under title XVI) is blind or
permanently and totally disabled, or (with respect to
States which are not eligible to participate in such
program) is blind or disabled as defined in section
1614,
is lawfully residing in the individual's home.
(3) Nothing in this subsection shall be construed as
preventing an individual from using a reverse mortgage or home
equity loan to reduce the individual's total equity interest in
the home.
(4) The Secretary shall establish a process whereby paragraph
(1) is waived in the case of a demonstrated hardship.
(g) Treatment of Entrance Fees of Individuals Residing in
Continuing Care Retirement Communities.--
(1) In general.--For purposes of determining an
individual's eligibility for, or amount of, benefits
under a State plan under this title, the rules
specified in paragraph (2) shall apply to individuals
residing in continuing care retirement communities or
life care communities that collect an entrance fee on
admission from such individuals.
(2) Treatment of entrance fee.--For purposes of this
subsection, an individual's entrance fee in a
continuing care retirement community or life care
community shall be considered a resource available to
the individual to the extent that--
(A) the individual has the ability to use the
entrance fee, or the contract provides that the
entrance fee may be used, to pay for care
should other resources or income of the
individual be insufficient to pay for such
care;
(B) the individual is eligible for a refund
of any remaining entrance fee when the
individual dies or terminates the continuing
care retirement community or life care
community contract and leaves the community;
and
(C) the entrance fee does not confer an
ownership interest in the continuing care
retirement community or life care community.
(h) In this section, the following definitions shall apply:
(1) The term ``assets'', with respect to an
individual, includes all income and resources of the
individual and of the individual's spouse, including
any income or resources which the individual or such
individual's spouse is entitled to but does not receive
because of action--
(A) by the individual or such individual's
spouse,
(B) by a person, including a court or
administrative body, with legal authority to
act in place of or on behalf of the individual
or such individual's spouse, or
(C) by any person, including any court or
administrative body, acting at the direction or
upon the request of the individual or such
individual's spouse.
(2) The term ``income'' has the meaning given such
term in section 1612.
(3) The term ``institutionalized individual'' means
an individual who is an inpatient in a nursing
facility, who is an inpatient in a medical institution
and with respect to whom payment is made based on a
level of care provided in a nursing facility, or who is
described in section 1902(a)(10)(A)(ii)(VI).
(4) The term ``noninstitutionalized individual''
means an individual receiving any of the services
specified in subsection (c)(1)(C)(ii).
(5) The term ``resources'' has the meaning given such
term in section 1613, without regard (in the case of an
institutionalized individual) to the exclusion
described in subsection (a)(1) of such section.
* * * * * * *
payment for covered outpatient drugs
Sec. 1927. (a) Requirement for Rebate Agreement.--
(1) In general.--In order for payment to be available
under section 1903(a) or under part B of title XVIII
for covered outpatient drugs of a manufacturer, the
manufacturer must have entered into and have in effect
a rebate agreement described in subsection (b) with the
Secretary, on behalf of States (except that, the
Secretary may authorize a State to enter directly into
agreements with a manufacturer), and must meet the
requirements of paragraph (5) (with respect to drugs
purchased by a covered entity on or after the first day
of the first month that begins after the date of the
enactment of title VI of the Veterans Health Care Act
of 1992) and paragraph (6). Any agreement between a
State and a manufacturer prior to April 1, 1991, shall
be deemed to have been entered into on January 1, 1991,
and payment to such manufacturer shall be retroactively
calculated as if the agreement between the manufacturer
and the State had been entered into on January 1, 1991.
If a manufacturer has not entered into such an
agreement before March 1, 1991, such an agreement,
subsequently entered into, shall become effective as of
the date on which the agreement is entered into or, at
State option, on any date thereafter on or before the
first day of the calendar quarter that begins more than
60 days after the date the agreement is entered into.
(2) Effective date.--Paragraph (1) shall first apply
to drugs dispensed under this title on or after January
1, 1991.
(3) Authorizing payment for drugs not covered under
rebate agreements.--Paragraph (1), and section
1903(i)(10)(A), shall not apply to the dispensing of a
single source drug or innovator multiple source drug if
(A)(i) the State has made a determination that the
availability of the drug is essential to the health of
beneficiaries under the State plan for medical
assistance; (ii) such drug has been given a rating of
1-A by the Food and Drug Administration; and (iii)(I)
the physician has obtained approval for use of the drug
in advance of its dispensing in accordance with a prior
authorization program described in subsection (d), or
(II) the Secretary has reviewed and approved the
State's determination under subparagraph (A); or (B)
the Secretary determines that in the first calendar
quarter of 1991, there were extenuating circumstances.
(4) Effect on existing agreements.--In the case of a
rebate agreement in effect between a State and a
manufacturer on the date of the enactment of this
section, such agreement, for the initial agreement
period specified therein, shall be considered to be a
rebate agreement in compliance with this section with
respect to that State, if the State agrees to report to
the Secretary any rebates paid pursuant to the
agreement and such agreement provides for a minimum
aggregate rebate of 10 percent of the State's total
expenditures under the State plan for coverage of the
manufacturer's drugs under this title. If, after the
initial agreement period, the State establishes to the
satisfaction of the Secretary that an agreement in
effect on the date of the enactment of this section
provides for rebates that are at least as large as the
rebates otherwise required under this section, and the
State agrees to report any rebates under the agreement
to the Secretary, the agreement shall be considered to
be a rebate agreement in compliance with the section
for the renewal periods of such agreement.
(5) Limitation on prices of drugs purchased by
covered entities.--
(A) Agreement with secretary.--A manufacturer
meets the requirements of this paragraph if the
manufacturer has entered into an agreement with
the Secretary that meets the requirements of
section 340B of the Public Health Service Act
with respect to covered outpatient drugs
purchased by a covered entity on or after the
first day of the first month that begins after
the date of the enactment of this paragraph.
(B) Covered entity defined.--In this
subsection, the term ``covered entity'' means
an entity described in section 340B(a)(4) of
the Public Health Service Act.
(C) Establishment of alternative mechanism to
ensure against duplicate discounts or
rebates.--If the Secretary does not establish a
mechanism under section 340B(a)(5)(A) of the
Public Health Service Act within 12 months of
the date of the enactment of such section, the
following requirements shall apply:
(i) Entities.--Each covered entity
shall inform the single State agency
under section 1902(a)(5) when it is
seeking reimbursement from the State
plan for medical assistance described
in section 1905(a)(12) with respect to
a unit of any covered outpatient drug
which is subject to an agreement under
section 340B(a) of such Act.
(ii) State agency.--Each such single
State agency shall provide a means by
which a covered entity shall indicate
on any drug reimbursement claims form
(or format, where electronic claims
management is used) that a unit of the
drug that is the subject of the form is
subject to an agreement under section
340B of such Act, and not submit to any
manufacturer a claim for a rebate
payment under subsection (b) with
respect to such a drug.
(D) Effect of subsequent amendments.--In
determining whether an agreement under
subparagraph (A) meets the requirements of
section 340B of the Public Health Service Act,
the Secretary shall not take into account any
amendments to such section that are enacted
after the enactment of title VI of the Veterans
Health Care Act of 1992.
(E) Determination of compliance.--A
manufacturer is deemed to meet the requirements
of this paragraph if the manufacturer
establishes to the satisfaction of the
Secretary that the manufacturer would comply
(and has offered to comply) with the provisions
of section 340B of the Public Health Service
Act (as in effect immediately after the
enactment of this paragraph, and would have
entered into an agreement under such section
(as such section was in effect at such time),
but for a legislative change in such section
after the date of the enactment of this
paragraph.
(6) Requirements relating to master
agreements for drugs procured by department of
veterans affairs and certain other federal
agencies.--
(A) In general.--A manufacturer meets
the requirements of this paragraph if
the manufacturer complies with the
provisions of section 8126 of title 38,
United States Code, including the
requirement of entering into a master
agreement with the Secretary of
Veterans Affairs under such section.
(B) Effect of subsequent
amendments.--In determining whether a
master agreement described in
subparagraph (A) meets the requirements
of section 8126 of title 38, United
States Code, the Secretary shall not
take into account any amendments to
such section that are enacted after the
enactment of title VI of the Veterans
Health Care Act of 1992.
(C) Determination of compliance.--A
manufacturer is deemed to meet the
requirements of this paragraph if the
manufacturer establishes to the
satisfaction of the Secretary that the
manufacturer would comply (and has
offered to comply) with the provisions
of section 8126 of title 38, United
States Code (as in effect immediately
after the enactment of this paragraph)
and would have entered into an
agreement under such section (as such
section was in effect at such time),
but for a legislative change in such
section after the date of the enactment
of this paragraph.
(7) Requirement for submission of utilization data
for certain physician administered drugs.--
(A) Single source drugs.--In order for
payment to be available under section 1903(a)
for a covered outpatient drug that is a single
source drug that is physician administered
under this title (as determined by the
Secretary), and that is administered on or
after January 1, 2006, the State shall provide
for the collection and submission of such
utilization data and coding (such as J-codes
and National Drug Code numbers) for each such
drug as the Secretary may specify as necessary
to identify the manufacturer of the drug in
order to secure rebates under this section for
drugs administered for which payment is made
under this title.
(B) Multiple source drugs.--
(i) Identification of most frequently
physician administered multiple source
drugs.--Not later than January 1, 2007,
the Secretary shall publish a list of
the 20 physician administered multiple
source drugs that the Secretary
determines have the highest dollar
volume of physician administered drugs
dispensed under this title. The
Secretary may modify such list from
year to year to reflect changes in such
volume.
(ii) Requirement.--In order for
payment to be available under section
1903(a) for a covered outpatient drug
that is a multiple source drug that is
physician administered (as determined
by the Secretary), that is on the list
published under clause (i), and that is
administered on or after January 1,
2008, the State shall provide for the
submission of such utilization data and
coding (such as J-codes and National
Drug Code numbers) for each such drug
as the Secretary may specify as
necessary to identify the manufacturer
of the drug in order to secure rebates
under this section.
(C) Use of ndc codes.--Not later than January
1, 2007, the information shall be submitted
under subparagraphs (A) and (B)(ii) using
National Drug Code codes unless the Secretary
specifies that an alternative coding system
should be used.
(D) Hardship waiver.--The Secretary may delay
the application of subparagraph (A) or (B)(ii),
or both, in the case of a State to prevent
hardship to States which require additional
time to implement the reporting system required
under the respective subparagraph.
(b) Terms of Rebate Agreement.--
(1) Periodic rebates.--
(A) In general.--A rebate agreement under
this subsection shall require the manufacturer
to provide, to each State plan approved under
this title, a rebate for a rebate period in an
amount specified in subsection (c) for covered
outpatient drugs of the manufacturer dispensed
after December 31, 1990, for which payment was
made under the State plan for such period,
including such drugs dispensed to individuals
enrolled with a medicaid managed care
organization if the organization is responsible
for coverage of such drugs. Such rebate shall
be paid by the manufacturer not later than 30
days after the date of receipt of the
information described in paragraph (2) for the
period involved.
(B) Offset against medical assistance.--
Amounts received by a State under this section
(or under an agreement authorized by the
Secretary under subsection (a)(1) or an
agreement described in subsection (a)(4)) in
any quarter shall be considered to be a
reduction in the amount expended under the
State plan in the quarter for medical
assistance for purposes of section 1903(a)(1).
(C) Special rule for increased minimum rebate
percentage.--
(i) In general.--In addition to the
amounts applied as a reduction under
subparagraph (B), for rebate periods
beginning on or after January 1, 2010,
during a fiscal year, the Secretary
shall reduce payments to a State under
section 1903(a) in the manner specified
in clause (ii), in an amount equal to
the product of--
(I) 100 percent minus the
Federal medical assistance
percentage applicable to the
rebate period for the State;
and
(II) the amounts received by
the State under such
subparagraph that are
attributable (as estimated by
the Secretary based on
utilization and other data) to
the increase in the minimum
rebate percentage effected by
the amendments made by
subsections (a)(1), (b), and
(d) of section 2501 of the
Patient Protection and
Affordable Care Act, taking
into account the additional
drugs included under the
amendments made by subsection
(c) of section 2501 of such
Act.
The Secretary shall adjust such payment
reduction for a calendar quarter to the
extent the Secretary determines, based
upon subsequent utilization and other
data, that the reduction for such
quarter was greater or less than the
amount of payment reduction that should
have been made.
(ii) Manner of payment reduction.--
The amount of the payment reduction
under clause (i) for a State for a
quarter shall be deemed an overpayment
to the State under this title to be
disallowed against the State's regular
quarterly draw for all Medicaid
spending under section 1903(d)(2). Such
a disallowance is not subject to a
reconsideration under section 1116(d).
(2) State provision of information.--
(A) State responsibility.--Each State agency
under this title shall report to each
manufacturer not later than 60 days after the
end of each rebate period and in a form
consistent with a standard reporting format
established by the Secretary, information on
the total number of units of each dosage form
and strength and package size of each covered
outpatient drug dispensed after December 31,
1990, for which payment was made under the plan
during the period, including such information
reported by each medicaid managed care
organization, and shall promptly transmit a
copy of such report to the Secretary.
(B) Audits.--A manufacturer may audit the
information provided (or required to be
provided) under subparagraph (A). Adjustments
to rebates shall be made to the extent that
information indicates that utilization was
greater or less than the amount previously
specified.
(3) Manufacturer provision of price information.--
(A) In general.--Each manufacturer with an
agreement in effect under this section shall
report to the Secretary--
(i) not later than 30 days after the
last day of each rebate period under
the agreement--
(I) on the average manufacturer price
(as defined in subsection (k)(1)) for
covered outpatient drugs for the rebate
period under the agreement (including
for all such drugs that are sold under
a new drug application approved under
section 505(c) of the Federal Food,
Drug, and Cosmetic Act); and
(II) for single source drugs and
innovator multiple source drugs
(including all such drugs that are sold
under a new drug application approved
under section 505(c) of the Federal
Food, Drug, and Cosmetic Act), on the
manufacturer's best price (as defined
in subsection (c)(1)(C)) for such drugs
for the rebate period under the
agreement;
(ii) not later than 30 days after the
date of entering into an agreement
under this section on the average
manufacturer price (as defined in
subsection (k)(1)) as of October 1,
1990 for each of the manufacturer's
covered outpatient drugs (including for
such drugs that are sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act); and
(iii) for calendar quarters beginning
on or after January 1, 2004, in
conjunction with reporting required
under clause (i) and by National Drug
Code (including package size)--
(I) the manufacturer's
average sales price (as defined
in section 1847A(c)) and the
total number of units specified
under section 1847A(b)(2)(A);
(II) if required to make
payment under section 1847A,
the manufacturer's wholesale
acquisition cost, as defined in
subsection (c)(6) of such
section; and
(III) information on those
sales that were made at a
nominal price or otherwise
described in section
1847A(c)(2)(B);
for a drug or biological described in
subparagraph (C), (D), (E), or (G) of
section 1842(o)(1) or section
1881(b)(13)(A)(ii), and, for calendar
quarters beginning on or after January
1, 2007 and only with respect to the
information described in subclause
(III), for covered outpatient drugs.
(iv) not later than 30 days after the
last day of each month of a rebate
period under the agreement, on the
manufacturer's total number of units
that are used to calculate the monthly
average manufacturer price for each
covered outpatient drug;
Information reported under this subparagraph is
subject to audit by the Inspector General of
the Department of Health and Human Services.
Beginning July 1, 2006, the Secretary shall
provide on a monthly basis to States under
subparagraph (D)(iv) the most recently reported
average manufacturer prices for single source
drugs and for multiple source drugs and shall,
on at least a quarterly basis, update the
information posted on the website under
subparagraph (D)(v) (relating to the weighted
average of the most recently reported monthly
average manufacturer prices).
(B) Verification surveys of average
manufacturer price and manufacturer's average
sales price.--The Secretary may survey
wholesalers and manufacturers that directly
distribute their covered outpatient drugs, when
necessary, to verify manufacturer prices and
manufacturer's average sales prices (including
wholesale acquisition cost) if required to make
payment reported under subparagraph (A). The
Secretary may impose a civil monetary penalty
in an amount not to exceed $100,000 on a
wholesaler, manufacturer, or direct seller, if
the wholesaler, manufacturer, or direct seller
of a covered outpatient drug refuses a request
for information about charges or prices by the
Secretary in connection with a survey under
this subparagraph or knowingly provides false
information. The provisions of section 1128A
(other than subsections (a) (with respect to
amounts of penalties or additional assessments)
and (b)) shall apply to a civil money penalty
under this subparagraph in the same manner as
such provisions apply to a penalty or
proceeding under section 1128A(a).
(C) Penalties.--
(i) Failure to provide timely
information.--In the case of a
manufacturer with an agreement under
this section that fails to provide
information required under subparagraph
(A) on a timely basis, the amount of
the penalty shall be increased by
$10,000 for each day in which such
information has not been provided and
such amount shall be paid to the
Treasury, and, if such information is
not reported within 90 days of the
deadline imposed, the agreement shall
be suspended for services furnished
after the end of such 90-day period and
until the date such information is
reported (but in no case shall such
suspension be for a period of less than
30 days).
(ii) False information.--Any
manufacturer with an agreement under
this section that knowingly provides
false information is subject to a civil
money penalty in an amount not to
exceed $100,000 for each item of false
information. Such civil money penalties
are in addition to other penalties as
may be prescribed by law. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to
a civil money penalty under this
subparagraph in the same manner as such
provisions apply to a penalty or
proceeding under section 1128A(a).
(D) Confidentiality of information.--
Notwithstanding any other provision of law,
information disclosed by manufacturers or
wholesalers under this paragraph or under an
agreement with the Secretary of Veterans
Affairs described in subsection (a)(6)(A)(ii)
(other than the wholesale acquisition cost for
purposes of carrying out section 1847A) is
confidential and shall not be disclosed by the
Secretary or the Secretary of Veterans Affairs
or a State agency (or contractor therewith) in
a form which discloses the identity of a
specific manufacturer or wholesaler, prices
charged for drugs by such manufacturer or
wholesaler, except--
(i) as the Secretary determines to be
necessary to carry out this section, to
carry out section 1847A (including the
determination and implementation of the
payment amount), or to carry out
section 1847B,
(ii) to permit the Comptroller
General to review the information
provided,
(iii) to permit the Director of the
Congressional Budget Office to review
the information provided,
(iv) to States to carry out this
title, and
(v) to the Secretary to disclose
(through a website accessible to the
public) the weighted average of the
most recently reported monthly average
manufacturer prices and the average
retail survey price determined for each
multiple source drug in accordance with
subsection (f).
The previous sentence shall also apply to
information disclosed under section 1860D-
2(d)(2) or 1860D-4(c)(2)(E) and drug pricing
data reported under the first sentence of
section 1860D-31(i)(1).
(4) Length of agreement.--
(A) In general.--A rebate agreement shall be
effective for an initial period of not less
than 1 year and shall be automatically renewed
for a period of not less than one year unless
terminated under subparagraph (B).
(B) Termination.--
(i) By the secretary.--The Secretary
may provide for termination of a rebate
agreement for violation of the
requirements of the agreement or other
good cause shown. Such termination
shall not be effective earlier than 60
days after the date of notice of such
termination. The Secretary shall
provide, upon request, a manufacturer
with a hearing concerning such a
termination, but such hearing shall not
delay the effective date of the
termination.
(ii) By a manufacturer.--A
manufacturer may terminate a rebate
agreement under this section for any
reason. Any such termination shall not
be effective until the calendar quarter
beginning at least 60 days after the
date the manufacturer provides notice
to the Secretary.
(iii) Effectiveness of termination.--
Any termination under this subparagraph
shall not affect rebates due under the
agreement before the effective date of
its termination.
(iv) Notice to states.--In the case
of a termination under this
subparagraph, the Secretary shall
provide notice of such termination to
the States within not less than 30 days
before the effective date of such
termination.
(v) Application to terminations of
other agreements.--The provisions of
this subparagraph shall apply to the
terminations of agreements described in
section 340B(a)(1) of the Public Health
Service Act and master agreements
described in section 8126(a) of title
38, United States Code.
(C) Delay before reentry.--In the case of any
rebate agreement with a manufacturer under this
section which is terminated, another such
agreement with the manufacturer (or a successor
manufacturer) may not be entered into until a
period of 1 calendar quarter has elapsed since
the date of the termination, unless the
Secretary finds good cause for an earlier
reinstatement of such an agreement.
(c) Determination of Amount of Rebate.--
(1) Basic rebate for single source drugs and
innovator multiple source drugs.--
(A) In general.--Except as provided in
paragraph (2), the amount of the rebate
specified in this subsection for a rebate
period (as defined in subsection (k)(8)) with
respect to each dosage form and strength of a
single source drug or an innovator multiple
source drug shall be equal to the product of--
(i) the total number of units of each
dosage form and strength paid for under
the State plan in the rebate period (as
reported by the State); and
(ii) subject to subparagraph (B)(ii),
the greater of--
(I) the difference between
the average manufacturer price
and the best price (as defined
in subparagraph (C)) for the
dosage form and strength of the
drug, or
(II) the minimum rebate
percentage (specified in
subparagraph (B)(i)) of such
average manufacturer price,
of or the rebate period.
(B) Range of rebates required.--
(i) Minimum rebate percentage.--For
purposes of subparagraph (A)(ii)(II),
the ``minimum rebate percentage'' for
rebate periods beginning--
(I) after December 31, 1990,
and before October 1, 1992, is
12.5 percent;
(II) after September 30,
1992, and before January 1,
1994, is 15.7 percent;
(III) after December 31,
1993, and before January 1,
1995, is 15.4 percent;
(IV) after December 31, 1994,
and before January 1, 1996, is
15.2 percent;
(V) after December 31, 1995,
and before January 1, 2010 is
15.1 percent;and
(VI) except as provided in
clause (iii), after December
31, 2009, 23.1 percent.
(ii) Temporary limitation on maximum
rebate amount.--In no case shall the
amount applied under subparagraph
(A)(ii) for a rebate period beginning--
(I) before January 1, 1992,
exceed 25 percent of the
average manufacturer price; or
(II) after December 31, 1991,
and before January 1, 1993,
exceed 50 percent of the
average manufacturer price.
(iii) Minimum rebate percentage for
certain drugs.--
(I) In general.--In the case
of a single source drug or an
innovator multiple source drug
described in subclause (II),
the minimum rebate percentage
for rebate periods specified in
clause (i)(VI) is 17.1 percent.
(II) Drug described.--For
purposes of subclause (I), a
single source drug or an
innovator multiple source drug
described in this subclause is
any of the following drugs:
(aa) A clotting
factor for which a
separate furnishing
payment is made under
section 1842(o)(5) and
which is included on a
list of such factors
specified and updated
regularly by the
Secretary.
(bb) A drug approved
by the Food and Drug
Administration
exclusively for
pediatric indications.
(C) Best price defined.--For purposes of this
section--
(i) In general.--The term ``best
price'' means, with respect to a single
source drug or innovator multiple
source drug of a manufacturer
(including the lowest price available
to any entity for any such drug of a
manufacturer that is sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act), the lowest price
available from the manufacturer during
the rebate period to any wholesaler,
retailer, provider, health maintenance
organization, nonprofit entity, or
governmental entity within the United
States, excluding--
(I) any prices charged on or
after October 1, 1992, to the
Indian Health Service, the
Department of Veterans Affairs,
a State home receiving funds
under section 1741 of title 38,
United States Code, the
Department of Defense, the
Public Health Service, or a
covered entity described in
subsection (a)(5)(B) (including
inpatient prices charged to
hospitals described in section
340B(a)(4)(L) of the Public
Health Service Act);
(II) any prices charged under
the Federal Supply Schedule of
the General Services
Administration;
(III) any prices used under a
State pharmaceutical assistance
program;
(IV) any depot prices and
single award contract prices,
as defined by the Secretary, of
any agency of the Federal
Government;
(V) the prices negotiated
from drug manufacturers for
covered discount card drugs
under an endorsed discount card
program under section 1860D-31;
and
(VI) any prices charged which
are negotiated by a
prescription drug plan under
part D of title XVIII, by an
MA-PD plan under part C of such
title with respect to covered
part D drugs or by a qualified
retiree prescription drug plan
(as defined in section 1860D-
22(a)(2)) with respect to such
drugs on behalf of individuals
entitled to benefits under part
A or enrolled under part B of
such title, or any discounts
provided by manufacturers under
the Medicare coverage gap
discount program under section
1860D-14A.
(ii) Special rules.--The term ``best
price''--
(I) shall be inclusive of
cash discounts, free goods that
are contingent on any purchase
requirement, volume discounts,
and rebates (other than rebates
under this section);
(II) shall be determined
without regard to special
packaging, labeling, or
identifiers on the dosage form
or product or package;
(III) shall not take into
account prices that are merely
nominal in amount; and
(IV) in the case of a manufacturer
that approves, allows, or otherwise
permits any other drug of the
manufacturer to be sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act, shall be inclusive of the
lowest price for such authorized drug
available from the manufacturer during
the rebate period to any manufacturer,
wholesaler, retailer, provider, health
maintenance organization, nonprofit
entity, or governmental entity within
the United States, excluding those
prices described in subclauses (I)
through (IV) of clause (i).
(iii) Application of auditing and
recordkeeping requirements.--With
respect to a covered entity described
in section 340B(a)(4)(L) of the Public
Health Service Act, any drug purchased
for inpatient use shall be subject to
the auditing and recordkeeping
requirements described in section
340B(a)(5)(C) of the Public Health
Service Act.
(D) Limitation on sales at a nominal price.--
(i) In general.--For purposes of
subparagraph (C)(ii)(III) and
subsection (b)(3)(A)(iii)(III), only
sales by a manufacturer of covered
outpatient drugs at nominal prices to
the following shall be considered to be
sales at a nominal price or merely
nominal in amount:
(I) A covered entity
described in section 340B(a)(4)
of the Public Health Service
Act.
(II) An intermediate care
facility for the mentally
retarded.
(III) A State-owned or
operated nursing facility.
(IV) An entity that--
(aa) is described in
section 501(c)(3) of
the Internal Revenue
Code of 1986 and exempt
from tax under section
501(a) of such Act or
is State-owned or
operated; and
(bb) would be a
covered entity
described in section
340(B)(a)(4) of the
Public Health Service
Act insofar as the
entity provides the
same type of services
to the same type of
populations as a
covered entity
described in such
section provides, but
does not receive
funding under a
provision of law
referred to in such
section;
(V) A public or nonprofit
entity, or an entity based at
an institution of higher
learning whose primary purpose
is to provide health care
services to students of that
institution, that provides a
service or services described
under section 1001(a) of the
Public Health Service Act, 42
U.S.C. 300.
(VI) Any other facility or
entity that the Secretary
determines is a safety net
provider to which sales of such
drugs at a nominal price would
be appropriate based on the
factors described in clause
(ii).
(ii) Factors.--The factors described
in this clause with respect to a
facility or entity are the following:
(I) The type of facility or
entity.
(II) The services provided by
the facility or entity.
(III) The patient population
served by the facility or
entity.
(IV) The number of other
facilities or entities eligible
to purchase at nominal prices
in the same service area.
(iii) Nonapplication.--Clause (i)
shall not apply with respect to sales
by a manufacturer at a nominal price of
covered outpatient drugs pursuant to a
master agreement under section 8126 of
title 38, United States Code.
(iv) Rule of Construction.--Nothing
in this subparagraph shall be construed
to alter any existing statutory or
regulatory prohibition on services with
respect to an entity described in
clause (i)(IV), including the
prohibition set forth in section 1008
of the Public Health Service Act.
(2) Additional rebate for single source and innovator
multiple source drugs.--
(A) In general.--The amount of the rebate
specified in this subsection for a rebate
period, with respect to each dosage form and
strength of a single source drug or an
innovator multiple source drug, shall be
increased by an amount equal to the product
of--
(i) the total number of units of such
dosage form and strength dispensed
after December 31, 1990, for which
payment was made under the State plan
for the rebate period; and
(ii) the amount (if any) by which--
(I) the average manufacturer
price for the dosage form and
strength of the drug for the
period, exceeds
(II) the average manufacturer
price for such dosage form and
strength for the calendar
quarter beginning July 1, 1990
(without regard to whether or
not the drug has been sold or
transferred to an entity,
including a division or
subsidiary of the manufacturer,
after the first day of such
quarter), increased by the
percentage by which the
consumer price index for all
urban consumers (United States
city average) for the month
before the month in which the
rebate period begins exceeds
such index for September 1990.
(B) Treatment of subsequently approved
drugs.--In the case of a covered outpatient
drug approved by the Food and Drug
Administration after October 1, 1990, clause
(ii)(II) of subparagraph (A) shall be applied
by substituting ``the first full calendar
quarter after the day on which the drug was
first marketed'' for ``the calendar quarter
beginning July 1, 1990'' and ``the month prior
to the first month of the first full calendar
quarter after the day on which the drug was
first marketed'' for ``September 1990''.
(C) Treatment of new formulations.--In the
case of a drug that is a line extension of a
single source drug or an innovator multiple
source drug that is an oral solid dosage form,
the rebate obligation with respect to such drug
under this section shall be the amount computed
under this section for such new drug or, if
greater, the product of--
(i) the average manufacturer price of
the line extension of a single source
drug or an innovator multiple source
drug that is an oral solid dosage form;
(ii) the highest additional rebate
(calculated as a percentage of average
manufacturer price) under this section
for any strength of the original single
source drug or innovator multiple
source drug; and
(iii) the total number of units of
each dosage form and strength of the
line extension product paid for under
the State plan in the rebate period (as
reported by the State).
In this subparagraph, the term ``line
extension'' means, with respect to a drug, a
new formulation of the drug, such as an
extended release formulation.
(D) Maximum rebate amount.--In no case shall
the sum of the amounts applied under paragraph
(1)(A)(ii) and this paragraph with respect to
each dosage form and strength of a single
source drug or an innovator multiple source
drug for a rebate period beginning after
December 31, 2009, exceed 100 percent of the
average manufacturer price of the drug.
(3) Rebate for other drugs.--
(A) In general.--Except as provided in
subparagraph (C), the amount of the rebate paid
to a State for a rebate period with respect to
each dosage form and strength of covered
outpatient drugs (other than single source
drugs and innovator multiple source drugs)
shall be equal to the product of--
(i) the applicable percentage (as
described in subparagraph (B)) of the
average manufacturer price for the
dosage form and strength for the rebate
period, and
(ii) the total number of units of
such dosage form and strength dispensed
after December 31, 1990, for which
payment was made under the State plan
for the rebate period.
(B) Applicable percentage defined.--For
purposes of subparagraph (A)(i), the
``applicable percentage'' for rebate periods
beginning--
(i) before January 1, 1994, is 10
percent,
(ii) after December 31, 1993, and
before January 1, 2010, is 11 percent;
and
(iii) after December 31, 2009, is 13
percent.
(C) Additional rebate.--
(i) In general.--The amount of the
rebate specified in this paragraph for
a rebate period, with respect to each
dosage form and strength of a covered
outpatient drug other than a single
source drug or an innovator multiple
source drug of a manufacturer, shall be
increased in the manner that the rebate
for a dosage form and strength of a
single source drug or an innovator
multiple source drug is increased under
subparagraphs (A) and (D) of paragraph
(2), except as provided in clause (ii).
(ii) Special rules for application of
provision.--In applying subparagraphs
(A) and (D) of paragraph (2) under
clause (i)--
(I) the reference in
subparagraph (A)(i) of such
paragraph to ``1990'' shall be
deemed a reference to ``2014'';
(II) subject to clause (iii),
the reference in subparagraph
(A)(ii) of such paragraph to
``the calendar quarter
beginning July 1, 1990'' shall
be deemed a reference to ``the
calendar quarter beginning July
1, 2014''; and
(III) subject to clause
(iii), the reference in
subparagraph (A)(ii) of such
paragraph to ``September 1990''
shall be deemed a reference to
``September 2014'';
(IV) the references in
subparagraph (D) of such
paragraph to ``paragraph
(1)(A)(ii)'', ``this
paragraph'', and ``December 31,
2009'' shall be deemed
references to ``subparagraph
(A)'', ``this subparagraph'',
and ``December 31, 2014'',
respectively; and
(V) any reference in such
paragraph to a ``single source
drug or an innovator multiple
source drug'' shall be deemed
to be a reference to a drug to
which clause (i) applies.
(iii) Special rule for certain
noninnovator multiple source drugs.--In
applying paragraph (2)(A)(ii)(II) under
clause (i) with respect to a covered
outpatient drug that is first marketed
as a drug other than a single source
drug or an innovator multiple source
drug after April 1, 2013, such
paragraph shall be applied--
(I) by substituting ``the
applicable quarter'' for ``the
calendar quarter beginning July
1, 1990''; and
(II) by substituting ``the
last month in such applicable
quarter'' for ``September
1990''.
(iv) Applicable quarter defined.--In
this subsection, the term ``applicable
quarter'' means, with respect to a drug
described in clause (iii), the fifth
full calendar quarter after which the
drug is marketed as a drug other than a
single source drug or an innovator
multiple source drug.
(d) Limitations on Coverage of Drugs.--
(1) Permissible restrictions.--(A) A State may
subject to prior authorization any covered outpatient
drug. Any such prior authorization program shall comply
with the requirements of paragraph (5).
(B) A State may exclude or otherwise restrict
coverage of a covered outpatient drug if--
(i) the prescribed use is not for a medically
accepted indication (as defined in subsection
(k)(6));
(ii) the drug is contained in the list
referred to in paragraph (2);
(iii) the drug is subject to such
restrictions pursuant to an agreement between a
manufacturer and a State authorized by the
Secretary under subsection (a)(1) or in effect
pursuant to subsection (a)(4); or
(iv) the State has excluded coverage of the
drug from its formulary established in
accordance with paragraph (4).
(2) List of drugs subject to restriction.--The
following drugs or classes of drugs, or their medical
uses, may be excluded from coverage or otherwise
restricted:
(A) Agents when used for anorexia, weight
loss, or weight gain.
(B) Agents when used to promote fertility.
(C) Agents when used for cosmetic purposes or
hair growth.
(D) Agents when used for the symptomatic
relief of cough and colds.
(E) Prescription vitamins and mineral
products, except prenatal vitamins and fluoride
preparations.
(F) Nonprescription drugs, except, in the
case of pregnant women (and women described in
section 1905(bb) as pregnant women pursuant to
paragraph (4) of such section) when recommended
in accordance with the Guideline referred to in
section 1905(bb)(2)(A), agents approved by the
Food and Drug Administration under the over-
the-counter monograph process for purposes of
promoting, and when used to promote, tobacco
cessation.
(G) Covered outpatient drugs which the
manufacturer seeks to require as a condition of
sale that associated tests or monitoring
services be purchased exclusively from the
manufacturer or its designee.
(H) Agents when used for the treatment of
sexual or erectile dysfunction, unless such
agents are used to treat a condition, other
than sexual or erectile dysfunction, for which
the agents have been approved by the Food and
Drug Administration.
(3) Update of drug listings.--The Secretary shall, by
regulation, periodically update the list of drugs or
classes of drugs described in paragraph (2) or their
medical uses, which the Secretary has determined, based
on data collected by surveillance and utilization
review programs of State medical assistance programs,
to be subject to clinical abuse or inappropriate use.
(4) Requirements for formularies.--A State may
establish a formulary if the formulary meets the
following requirements:
(A) The formulary is developed by a committee
consisting of physicians, pharmacists, and
other appropriate individuals appointed by the
Governor of the State (or, at the option of the
State, the State's drug use review board
established under subsection (g)(3)).
(B) Except as provided in subparagraph (C),
the formulary includes the covered outpatient
drugs of any manufacturer which has entered
into and complies with an agreement under
subsection (a) (other than any drug excluded
from coverage or otherwise restricted under
paragraph (2)).
(C) A covered outpatient drug may be excluded
with respect to the treatment of a specific
disease or condition for an identified
population (if any) only if, based on the
drug's labeling (or, in the case of a drug the
prescribed use of which is not approved under
the Federal Food, Drug, and Cosmetic Act but is
a medically accepted indication, based on
information from the appropriate compendia
described in subsection (k)(6)), the excluded
drug does not have a significant, clinically
meaningful therapeutic advantage in terms of
safety, effectiveness, or clinical outcome of
such treatment for such population over other
drugs included in the formulary and there is a
written explanation (available to the public)
of the basis for the exclusion.
(D) The State plan permits coverage of a drug
excluded from the formulary (other than any
drug excluded from coverage or otherwise
restricted under paragraph (2)) pursuant to a
prior authorization program that is consistent
with paragraph (5).
(E) The formulary meets such other
requirements as the Secretary may impose in
order to achieve program savings consistent
with protecting the health of program
beneficiaries.
A prior authorization program established by a State
under paragraph (5) is not a formulary subject to the
requirements of this paragraph.
(5) Requirements of prior authorization programs.--A
State plan under this title may require, as a condition
of coverage or payment for a covered outpatient drug
for which Federal financial participation is available
in accordance with this section, with respect to drugs
dispensed on or after July 1, 1991, the approval of the
drug before its dispensing for any medically accepted
indication (as defined in subsection (k)(6)) only if
the system providing for such approval--
(A) provides response by telephone or other
telecommunication device within 24 hours of a
request for prior authorization; and
(B) except with respect to the drugs on the
list referred to in paragraph (2), provides for
the dispensing of at least 72-hour supply of a
covered outpatient prescription drug in an
emergency situation (as defined by the
Secretary).
(6) Other permissible restrictions.--A State may
impose limitations, with respect to all such drugs in a
therapeutic class, on the minimum or maximum quantities
per prescription or on the number of refills, if such
limitations are necessary to discourage waste, and may
address instances of fraud or abuse by individuals in
any manner authorized under this Act.
(7) Non-excludable drugs.--The following drugs or
classes of drugs, or their medical uses, shall not be
excluded from coverage:
(A) Agents when used to promote smoking
cessation, including agents approved by the
Food and Drug Administration under the over-
the-counter monograph process for purposes of
promoting, and when used to promote, tobacco
cessation.
(B) Barbiturates.
(C) Benzodiazepines.
(e) Treatment of Pharmacy Reimbursement Limits.--
(1) In general.--During the period beginning on
January 1, 1991, and ending on December 31, 1994--
(A) a State may not reduce the payment limits
established by regulation under this title or
any limitation described in paragraph (3) with
respect to the ingredient cost of a covered
outpatient drug or the dispensing fee for such
a drug below the limits in effect as of January
1, 1991, and
(B) except as provided in paragraph (2), the
Secretary may not modify by regulation the
formula established under sections 447.331
through 447.334 of title 42, Code of Federal
Regulations, in effect on November 5, 1990, to
reduce the limits described in subparagraph
(A).
(2) Special rule.--If a State is not in compliance
with the regulations described in paragraph (1)(B),
paragraph (1)(A) shall not apply to such State until
such State is in compliance with such regulations.
(3) Effect on state maximum allowable cost
limitations.--This section shall not supersede or
affect provisions in effect prior to January 1, 1991,
or after December 31, 1994, relating to any maximum
allowable cost limitation established by a State for
payment by the State for covered outpatient drugs, and
rebates shall be made under this section without regard
to whether or not payment by the State for such drugs
is subject to such a limitation or the amount of such a
limitation.
(4) Establishment of upper payment Limits.--Subject
to paragraph (5), the Secretary shall establish a
Federal upper reimbursement limit for each multiple
source drug for which the FDA has rated three or more
products therapeutically and pharmaceutically
equivalent, regardless of whether all such additional
formulations are rated as such and shall use only such
formulations when determining any such upper limit.
(5) Use of amp in upper payment limits.--The
Secretary shall calculate the Federal upper
reimbursement limit established under paragraph (4) as
no less than 175 percent of the weighted average
(determined on the basis of utilization) of the most
recently reported monthly average manufacturer prices
for pharmaceutically and therapeutically equivalent
multiple source drug products that are available for
purchase by retail community pharmacies on a nationwide
basis. The Secretary shall implement a smoothing
process for average manufacturer prices. Such process
shall be similar to the smoothing process used in
determining the average sales price of a drug or
biological under section 1847A.
(f) Survey of Retail Prices; State Payment and Utilization
Rates; and Performance Rankings.--
(1) Survey of retail prices.--
(A) Use of vendor.--The Secretary may
contract services for--
(i) with respect to a retail
community pharmacy, the determination
on a monthly basis of retail survey
prices for covered outpatient drugs
that represent a nationwide average of
consumer purchase prices for such
drugs, net of all discounts and rebates
(to the extent any information with
respect to such discounts and rebates
is available); and
(ii) the notification of the
Secretary when a drug product that is
therapeutically and pharmaceutically
equivalent and bioequivalent becomes
generally available.
(B) Secretary response to notification of
availability of multiple source products.--If
contractor notifies the Secretary under
subparagraph (A)(ii) that a drug product
described in such subparagraph has become
generally available, the Secretary shall make a
determination, within 7 days after receiving
such notification, as to whether the product is
now described in subsection (e)(4).
(C) Use of competitive bidding.--In
contracting for such services, the Secretary
shall competitively bid for an outside vendor
that has a demonstrated history in--
(i) surveying and determining, on a
representative nationwide basis, retail
prices for ingredient costs of
prescription drugs;
(ii) working with retail community
pharmacies, commercial payers, and
States in obtaining and disseminating
such price information; and
(iii) collecting and reporting such
price information on at least a monthly
basis.
In contracting for such services, the Secretary
may waive such provisions of the Federal
Acquisition Regulation as are necessary for the
efficient implementation of this subsection,
other than provisions relating to
confidentiality of information and such other
provisions as the Secretary determines
appropriate.
(D) Additional provisions.--A contract with a
vendor under this paragraph shall include such
terms and conditions as the Secretary shall
specify, including the following:
(i) The vendor must monitor the
marketplace and report to the Secretary
each time there is a new covered
outpatient drug generally available.
(ii) The vendor must update the
Secretary no less often than monthly on
the retail survey prices for covered
outpatient drugs.
(iii) The contract shall be effective
for a term of 2 years.
(E) Availability of information to states.--
Information on retail survey prices obtained
under this paragraph, including applicable
information on single source drugs, shall be
provided to States on at least a monthly basis.
The Secretary shall devise and implement a
means for providing access to each State agency
designated under section 1902(a)(5) with
responsibility for the administration or
supervision of the administration of the State
plan under this title of the retail survey
price determined under this paragraph.
(2) Annual state report.--Each State shall annually
report to the Secretary information on--
(A) the payment rates under the State plan
under this title for covered outpatient drugs;
(B) the dispensing fees paid under such plan
for such drugs; and
(C) utilization rates for noninnovator
multiple source drugs under such plan.
(3) Annual state performance rankings.--
(A) Comparative analysis.--The Secretary
annually shall compare, for the 50 most widely
prescribed drugs identified by the Secretary,
the national retail sales price data (collected
under paragraph (1)) for such drugs with data
on prices under this title for each such drug
for each State.
(B) Availability of information.--The
Secretary shall submit to Congress and the
States full information regarding the annual
rankings made under subparagraph (A).
(4) Appropriation.--Out of any funds in the Treasury
not otherwise appropriated, there is appropriated to
the Secretary of Health and Human Services $5,000,000
for each of fiscal years 2006 through 2010 to carry out
this subsection.
(g) Drug Use Review.--
(1) In general.--
(A) In order to meet the requirement of
section 1903(i)(10)(B), a State shall provide,
by not later than January 1, 1993, for a drug
use review program described in paragraph (2)
for covered outpatient drugs in order to assure
that prescriptions (i) are appropriate, (ii)
are medically necessary, and (iii) are not
likely to result in adverse medical results.
The program shall be designed to educate
physicians and pharmacists to identify and
reduce the frequency of patterns of fraud,
abuse, gross overuse, or inappropriate or
medically unnecessary care, among physicians,
pharmacists, and patients, or associated with
specific drugs or groups of drugs, as well as
potential and actual severe adverse reactions
to drugs including education on therapeutic
appropriateness, overutilization and
underutilization, appropriate use of generic
products, therapeutic duplication, drug-disease
contraindications, drug-drug interactions,
incorrect drug dosage or duration of drug
treatment, drug-allergy interactions, and
clinical abuse/misuse.
(B) The program shall assess data on drug use
against predetermined standards, consistent
with the following:
(i) compendia which shall consist of
the following:
(I) American Hospital
Formulary Service Drug
Information;
(II) United States
Pharmacopeia-Drug Information
(or its successor
publications); and
(III) the DRUGDEX Information
System; and
(ii) the peer-reviewed medical
literature.
(C) The Secretary, under the procedures
established in section 1903, shall pay to each
State an amount equal to 75 per centum of so
much of the sums expended by the State plan
during calendar years 1991 through 1993 as the
Secretary determines is attributable to the
statewide adoption of a drug use review program
which conforms to the requirements of this
subsection.
(D) States shall not be required to perform
additional drug use reviews with respect to
drugs dispensed to residents of nursing
facilities which are in compliance with the
drug regimen review procedures prescribed by
the Secretary for such facilities in
regulations implementing section 1919,
currently at section 483.60 of title 42, Code
of Federal Regulations.
(2) Description of program.--Each drug use review
program shall meet the following requirements for
covered outpatient drugs:
(A) Prospective drug review.--(i) The State
plan shall provide for a review of drug therapy
before each prescription is filled or delivered
to an individual receiving benefits under this
title, typically at the point-of-sale or point
of distribution. The review shall include
screening for potential drug therapy problems
due to therapeutic duplication, drug-disease
contraindications, drug-drug interactions
(including serious interactions with
nonprescription or over-the-counter drugs),
incorrect drug dosage or duration of drug
treatment, drug-allergy interactions, and
clinical abuse/misuse. Each State shall use the
compendia and literature referred to in
paragraph (1)(B) as its source of standards for
such review.
(ii) As part of the State's prospective drug
use review program under this subparagraph
applicable State law shall establish standards
for counseling of individuals receiving
benefits under this title by pharmacists which
includes at least the following:
(I) The pharmacist must offer to
discuss with each individual receiving
benefits under this title or caregiver
of such individual (in person, whenever
practicable, or through access to a
telephone service which is toll-free
for long-distance calls) who presents a
prescription, matters which in the
exercise of the pharmacist's
professional judgment (consistent with
State law respecting the provision of
such information), the pharmacist deems
significant including the following:
(aa) The name and description
of the medication.
(bb) The route, dosage form,
dosage, route of
administration, and duration of
drug therapy.
(cc) Special directions and
precautions for preparation,
administration and use by the
patient.
(dd) Common severe side or
adverse effects or interactions
and therapeutic
contraindications that may be
encountered, including their
avoidance, and the action
required if they occur.
(ee) Techniques for self-
monitoring drug therapy.
(ff) Proper storage.
(gg) Prescription refill
information.
(hh) Action to be taken in
the event of a missed dose.
(II) A reasonable effort must be made
by the pharmacist to obtain, record,
and maintain at least the following
information regarding individuals
receiving benefits under this title:
(aa) Name, address, telephone
number, date of birth (or age)
and gender.
(bb) Individual history where
significant, including disease
state or states, known
allergies and drug reactions,
and a comprehensive list of
medications and relevant
devices.
(cc) Pharmacist comments
relevant to the individual's
drug therapy.
Nothing in this clause shall be construed as
requiring a pharmacist to provide consultation
when an individual receiving benefits under
this title or caregiver of such individual
refuses such consultation, or to require
verification of the offer to provide
consultation or a refusal of such offer.
(B) Retrospective drug use review.--The
program shall provide, through its mechanized
drug claims processing and information
retrieval systems (approved by the Secretary
under section 1903(r)) or otherwise, for the
ongoing periodic examination of claims data and
other records in order to identify patterns of
fraud, abuse, gross overuse, or inappropriate
or medically unnecessary care, among
physicians, pharmacists and individuals
receiving benefits under this title, or
associated with specific drugs or groups of
drugs.
(C) Application of standards.--The program
shall, on an ongoing basis, assess data on drug
use against explicit predetermined standards
(using the compendia and literature referred to
in subsection (1)(B) as the source of standards
for such assessment) including but not limited
to monitoring for therapeutic appropriateness,
overutilization and underutilization,
appropriate use of generic products,
therapeutic duplication, drug-disease
contraindications, drug-drug interactions,
incorrect drug dosage or duration of drug
treatment, and clinical abuse/misuse and, as
necessary, introduce remedial strategies, in
order to improve the quality of care and to
conserve program funds or personal
expenditures.
(D) Educational program.--The program shall,
through its State drug use review board
established under paragraph (3), either
directly or through contracts with accredited
health care educational institutions, State
medical societies or State pharmacists
associations/societies or other organizations
as specified by the State, and using data
provided by the State drug use review board on
common drug therapy problems, provide for
active and ongoing educational outreach
programs (including the activities described in
paragraph (3)(C)(iii) of this subsection) to
educate practitioners on common drug therapy
problems with the aim of improving prescribing
or dispensing practices.
(3) State drug use review board.--
(A) Establishment.--Each State shall provide
for the establishment of a drug use review
board (hereinafter referred to as the ``DUR
Board'') either directly or through a contract
with a private organization.
(B) Membership.--The membership of the DUR
Board shall include health care professionals
who have recognized knowledge and expertise in
one or more of the following:
(i) The clinically appropriate
prescribing of covered outpatient
drugs.
(ii) The clinically appropriate
dispensing and monitoring of covered
outpatient drugs.
(iii) Drug use review, evaluation,
and intervention.
(iv) Medical quality assurance.
The membership of the DUR Board shall be made
up at least \1/3\ but no more than 51 percent
licensed and actively practicing physicians and
at least \1/3\ licensed and actively practicing
pharmacists.
(C) Activities.--The activities of the DUR
Board shall include but not be limited to the
following:
(i) Retrospective DUR as defined in
section (2)(B).
(ii) Application of standards as
defined in section (2)(C).
(iii) Ongoing interventions for
physicians and pharmacists, targeted
toward therapy problems or individuals
identified in the course of
retrospective drug use reviews
performed under this subsection.
Intervention programs shall include, in
appropriate instances, at least:
(I) information dissemination
sufficient to ensure the ready
availability to physicians and
pharmacists in the State of
information concerning its
duties, powers, and basis for
its standards;
(II) written, oral, or
electronic reminders containing
patient-specific or drug-
specific (or both) information
and suggested changes in
prescribing or dispensing
practices, communicated in a
manner designed to ensure the
privacy of patient-related
information;
(III) use of face-to-face
discussions between health care
professionals who are experts
in rational drug therapy and
selected prescribers and
pharmacists who have been
targeted for educational
intervention, including
discussion of optimal
prescribing, dispensing, or
pharmacy care practices, and
follow-up face-to-face
discussions; and
(IV) intensified review or
monitoring of selected
prescribers or dispensers.
The Board shall re-evaluate interventions after
an appropriate period of time to determine if
the intervention improved the quality of drug
therapy, to evaluate the success of the
interventions and make modifications as
necessary.
(D) Annual report.--Each State shall require
the DUR Board to prepare a report on an annual
basis. The State shall submit a report on an
annual basis to the Secretary which shall
include a description of the activities of the
Board, including the nature and scope of the
prospective and retrospective drug use review
programs, a summary of the interventions used,
an assessment of the impact of these
educational interventions on quality of care,
and an estimate of the cost savings generated
as a result of such program. The Secretary
shall utilize such report in evaluating the
effectiveness of each State's drug use review
program.
(h) Electronic Claims Management.--
(1) In general.--In accordance with chapter 35 of
title 44, United States Code (relating to coordination
of Federal information policy), the Secretary shall
encourage each State agency to establish, as its
principal means of processing claims for covered
outpatient drugs under this title, a point-of-sale
electronic claims management system, for the purpose of
performing on-line, real time eligibility
verifications, claims data capture, adjudication of
claims, and assisting pharmacists (and other authorized
persons) in applying for and receiving payment.
(2) Encouragement.--In order to carry out paragraph
(1)--
(A) for calendar quarters during fiscal years
1991 and 1992, expenditures under the State
plan attributable to development of a system
described in paragraph (1) shall receive
Federal financial participation under section
1903(a)(3)(A)(i) (at a matching rate of 90
percent) if the State acquires, through
applicable competitive procurement process in
the State, the most cost-effective
telecommunications network and automatic data
processing services and equipment; and
(B) the Secretary may permit, in the
procurement described in subparagraph (A) in
the application of part 433 of title 42, Code
of Federal Regulations, and parts 95, 205, and
307 of title 45, Code of Federal Regulations,
the substitution of the State's request for
proposal in competitive procurement for advance
planning and implementation documents otherwise
required.
(i) Annual Report.--
(1) In general.--Not later than May 1 of each year
the Secretary shall transmit to the Committee on
Finance of the Senate, the Committee on Energy and
Commerce of the House of Representatives, and the
Committees on Aging of the Senate and the House of
Representatives a report on the operation of this
section in the preceding fiscal year.
(2) Details.--Each report shall include information
on--
(A) ingredient costs paid under this title
for single source drugs, multiple source drugs,
and nonprescription covered outpatient drugs;
(B) the total value of rebates received and
number of manufacturers providing such rebates;
(C) how the size of such rebates compare with
the size or rebates offered to other purchasers
of covered outpatient drugs;
(D) the effect of inflation on the value of
rebates required under this section;
(E) trends in prices paid under this title
for covered outpatient drugs; and
(F) Federal and State administrative costs
associated with compliance with the provisions
of this title.
(j) Exemption of Organized Health Care Settings.--
(1) Covered outpatient drugs are not subject to the
requirements of this section if such drugs are--
(A) dispensed by health maintenance
organizations, including Medicaid managed care
organizations that contract under section
1903(m); and
(B) subject to discounts under section 340B
of the Public Health Service Act.
(2) The State plan shall provide that a hospital (providing
medical assistance under such plan) that dispenses covered
outpatient drugs using drug formulary systems, and bills the
plan no more than the hospital's purchasing costs for covered
outpatient drugs (as determined under the State plan) shall not
be subject to the requirements of this section.
(3) Nothing in this subsection shall be construed as
providing that amounts for covered outpatient drugs paid by the
institutions described in this subsection should not be taken
into account for purposes of determining the best price as
described in subsection (c).
(k) Definitions.--In the section--
(1) Average manufacturer price.--
(A) In general.--Subject to subparagraph (B),
the term ``average manufacturer price'' means,
with respect to a covered outpatient drug of a
manufacturer for a rebate period, the average
price paid to the manufacturer for the drug in
the United States by--
(i) wholesalers for drugs distributed
to retail community pharmacies; and
(ii) retail community pharmacies that
purchase drugs directly from the
manufacturer.
(B) Exclusion of customary prompt pay
discounts and other payments.--
(i) In general.--The average
manufacturer price for a covered
outpatient drug shall exclude--
(I) customary prompt pay
discounts extended to
wholesalers;
(II) bona fide service fees
paid by manufacturers to
wholesalers or retail community
pharmacies, including (but not
limited to) distribution
service fees, inventory
management fees, product
stocking allowances, and fees
associated with administrative
services agreements and patient
care programs (such as
medication compliance programs
and patient education
programs);
(III) reimbursement by
manufacturers for recalled,
damaged, expired, or otherwise
unsalable returned goods,
including (but not limited to)
reimbursement for the cost of
the goods and any reimbursement
of costs associated with return
goods handling and processing,
reverse logistics, and drug
destruction;
(IV) payments received from,
and rebates or discounts
provided to, pharmacy benefit
managers, managed care
organizations, health
maintenance organizations,
insurers, hospitals, clinics,
mail order pharmacies, long
term care providers,
manufacturers, or any other
entity that does not conduct
business as a wholesaler or a
retail community pharmacy,
unless the drug is an
inhalation, infusion,
instilled, implanted, or
injectable drug that is not
generally dispensed through a
retail community pharmacy; and
(V) discounts provided by
manufacturers under section
1860D-14A.
(ii) Inclusion of other discounts and
payments.--Notwithstanding clause (i),
any other discounts, rebates, payments,
or other financial transactions that
are received by, paid by, or passed
through to, retail community pharmacies
shall be included in the average
manufacturer price for a covered
outpatient drug.
(C) Inclusion of section 505(c) drugs.--In
the case of a manufacturer that approves,
allows, or otherwise permits any drug of the
manufacturer to be sold under a new drug
application approved under section 505(c) of
the Federal Food, Drug, and Cosmetic Act, such
term shall be inclusive of the average price
paid for such drug by wholesalers for drugs
distributed to retail community pharmacies.
(2) Covered outpatient drug.--Subject to the
exceptions in paragraph (3), the term ``covered
outpatient drug'' means--
(A) of those drugs which are treated as
prescribed drugs for purposes of section
1905(a)(12), a drug which may be dispensed only
upon prescription (except as provided in
paragraph (5)), and--
(i) which is approved for safety and
effectiveness as a prescription drug
under section 505 or 507 of the Federal
Food, Drug, and Cosmetic Act or which
is approved under section 505(j) of
such Act;
(ii)(I) which was commercially used
or sold in the United States before the
date of the enactment of the Drug
Amendments of 1962 or which is
identical, similar, or related (within
the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal
Regulations) to such a drug, and (II)
which has not been the subject of a
final determination by the Secretary
that it is a ``new drug'' (within the
meaning of section 201(p) of the
Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary
under section 301, 302(a), or 304(a) of
such Act to enforce section 502(f) or
505(a) of such Act; or
(iii)(I) which is described in
section 107(c)(3) of the Drug
Amendments of 1962 and for which the
Secretary has determined there is a
compelling justification for its
medical need, or is identical, similar,
or related (within the meaning of
section 310.6(b)(1) of title 21 of the
Code of Federal Regulations) to such a
drug, and (II) for which the Secretary
has not issued a notice of an
opportunity for a hearing under section
505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the
Secretary to withdraw approval of an
application for such drug under such
section because the Secretary has
determined that the drug is less than
effective for some or all conditions of
use prescribed, recommended, or
suggested in its labeling; and
(B) a biological product, other than a
vaccine which--
(i) may only be dispensed upon
prescription,
(ii) is licensed under section 351 of
the Public Health Service Act, and
(iii) is produced at an establishment
licensed under such section to produce
such product; and
(C) insulin certified under section 506 of
the Federal Food, Drug, and Cosmetic Act.
(3) Limiting definition.--The term ``covered
outpatient drug'' does not include any drug, biological
product, or insulin provided as part of, or as incident
to and in the same setting as, any of the following
(and for which payment may be made under this title as
part of payment for the following and not as direct
reimbursement for the drug):
(A) Inpatient hospital services.
(B) Hospice services.
(C) Dental services, except that drugs for
which the State plan authorizes direct
reimbursement to the dispensing dentist are
covered outpatient drugs.
(D) Physicians' services.
(E) Outpatient hospital services.
(F) Nursing facility services and services
provided by an intermediate care facility for
the mentally retarded.
(G) Other laboratory and x-ray services.
(H) Renal dialysis.
Such term also does not include any such drug or
product for which a National Drug Code number is not
required by the Food and Drug Administration or a drug
or biological used for a medical indication which is
not a medically accepted indication. Any drug,
biological product, or insulin excluded from the
definition of such term as a result of this paragraph
shall be treated as a covered outpatient drug for
purposes of determining the best price (as defined in
subsection (c)(1)(C)) for such drug, biological
product, or insulin.
(4) Nonprescription drugs.--If a State plan for
medical assistance under this title includes coverage
of prescribed drugs as described in section 1905(a)(12)
and permits coverage of drugs which may be sold without
a prescription (commonly referred to as ``over-the-
counter'' drugs), if they are prescribed by a physician
(or other person authorized to prescribe under State
law), such a drug shall be regarded as a covered
outpatient drug.
(5) Manufacturer.--The term ``manufacturer'' means
any entity which is engaged in--
(A) the production, preparation, propagation,
compounding, conversion, or processing of
prescription drug products, either directly or
indirectly by extraction from substances of
natural origin, or independently by means of
chemical synthesis, or by a combination of
extraction and chemical synthesis, or
(B) in the packaging, repackaging, labeling,
relabeling, or distribution of prescription
drug products.
Such term does not include a wholesale distributor of
drugs or a retail pharmacy licensed under State law.
(6) Medically accepted indication.--The term
``medically accepted indication'' means any use for a
covered outpatient drug which is approved under the
Federal Food, Drug, and Cosmetic Act, or the use of
which is supported by one or more citations included or
approved for inclusion in any of the compendia
described in subsection (g)(1)(B)(i).
(7) Multiple source drug; innovator multiple source
drug; noninnovator multiple source drug; single source
drug.--
(A) Defined.--
(i) Multiple source drug.--The term
``multiple source drug'' means, with
respect to a rebate period, a covered
outpatient drug (not including any drug
described in paragraph (5)) for which
there at least 1 other drug product
which--
(I) is rated as
therapeutically equivalent
(under the Food and Drug
Administration's most recent
publication of ``Approved Drug
Products with Therapeutic
Equivalence Evaluations''),
(II) except as provided in
subparagraph (B), is
pharmaceutically equivalent and
bioequivalent, as defined in
subparagraph (C) and as
determined by the Food and Drug
Administration, and
(III) is sold or marketed in
the United States during the
period.
(ii) Innovator multiple source
drug.--The term ``innovator multiple
source drug'' means a multiple source
drug that was originally marketed under
an original new drug application
approved by the Food and Drug
Administration.
(iii) Noninnovator multiple source
drug.--The term ``noninnovator multiple
source drug'' means a multiple source
drug that is not an innovator multiple
source drug.
(iv) Single source drug.--The term
``single source drug'' means a covered
outpatient drug which is produced or
distributed under an original new drug
application approved by the Food and
Drug Administration, including a drug
product marketed by any cross-licensed
producers or distributors operating
under the new drug application.
(B) Exception.--Subparagraph (A)(i)(II) shall
not apply if the Food and Drug Administration
changes by regulation the requirement that, for
purposes of the publication described in
subparagraph (A)(i)(I), in order for drug
products to be rated as therapeutically
equivalent, they must be pharmaceutically
equivalent and bioequivalent, as defined in
subparagraph (C).
(C) Definitions.--For purposes of this
paragraph--
(i) drug products are
pharmaceutically equivalent if the
products contain identical amounts of
the same active drug ingredient in the
same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity; and
(ii) drugs are bioequivalent if they
do not present a known or potential
bioequivalence problem, or, if they do
present such a problem, they are shown
to meet an appropriate standard of
bioequivalence.
(8) Rebate period.--The term ``rebate period'' means,
with respect to an agreement under subsection (a), a
calendar quarter or other period specified by the
Secretary with respect to the payment of rebates under
such agreement.
(9) State agency.--The term ``State agency'' means
the agency designated under section 1902(a)(5) to
administer or supervise the administration of the State
plan for medical assistance.
(10) Retail community pharmacy.--The term ``retail
community pharmacy'' means an independent pharmacy, a
chain pharmacy, a supermarket pharmacy, or a mass
merchandiser pharmacy that is licensed as a pharmacy by
the State and that dispenses medications to the general
public at retail prices. Such term does not include a
pharmacy that dispenses prescription medications to
patients primarily through the mail, nursing home
pharmacies, long-term care facility pharmacies,
hospital pharmacies, clinics, charitable or not-for-
profit pharmacies, government pharmacies, or pharmacy
benefit managers.
(11) Wholesaler.--The term ``wholesaler'' means a
drug wholesaler that is engaged in wholesale
distribution of prescription drugs to retail community
pharmacies, including (but not limited to)
manufacturers, repackers, distributors, own-label
distributors, private-label distributors, jobbers,
brokers, warehouses (including manufacturer's and
distributor's warehouses, chain drug warehouses, and
wholesale drug warehouses) independent wholesale drug
traders, and retail community pharmacies that conduct
wholesale distributions.
* * * * * * *
medicaid improvement fund
Sec. 1941. (a) Establishment.--The Secretary shall establish
under this title a Medicaid Improvement Fund (in this section
referred to as the ``Fund'') which shall be available to the
Secretary to improve the management of the Medicaid program by
the Centers for Medicare & Medicaid Services, including
oversight of contracts and contractors and evaluation of
demonstration projects. Payments made for activities under this
subsection shall be in addition to payments that would
otherwise be made for such activities.
(b) Funding.--
(1) In general.--There shall be available to
the Fund, for expenditures from the Fund--
(A) for fiscal year 2014,
$10,000,000; and
(B) for each of fiscal years 2015
through 2018, $0.
(2) Additional funding.--In addition to any
funds otherwise made available to the Fund,
there shall be available to the Fund, for
expenditures from the Fund--
(A) for fiscal year 2021,
$10,000,000, to remain available until
expended; and
(B) for fiscal year 2022,
$14,000,000, to remain available until
expended.
[(2)] (3) Funding limitation.--Amounts in the
Fund shall be available in advance of
appropriations but only if the total amount
obligated from the Fund does not exceed the
amount available to the Fund [under paragraph
(1)] under this subsection. The Secretary may
obligate funds from the Fund only if the
Secretary determines (and the Chief Actuary of
the Centers for Medicare & Medicaid Services
and the appropriate budget officer certify)
that there are available in the Fund sufficient
amounts to cover all such obligations incurred
consistent with the previous sentence.
* * * * * * *
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